What will a no-deal Brexit bring to the hospitality industry?

14/03/2019 - 11:48
As Britain gets closer to leaving the EU, we have but a vague understanding of what the lasting implications may be. But if we do leave without a deal come 29 March, it will undoubtedly have a negative impact on Britain’s industries, and on hospitality in particular. Report written by the Immigration Advice Service.

The effects of a no-deal Brexit would most noticeably be felt in the workforce, as the sector’s access to labour would become much more complicated. At the moment, 12% of hospitality workers come from the EU.

Businesses such as hotels, bars and cafés all hire EU migrants to work as cleaners, front-of-house, and other service roles. It’s estimated that three quarters of EU citizens fill waitressing roles; one third are in housekeeping; and a fifth in kitchen and catering.

If Britain does leave the EU without a deal, the ramifications upon the industry are quite obvious.

The changes will also make it harder for hospitality businesses to recruit seasonal and temporary staff, with 40% already admitting that they are struggling to fill such roles since the Brexit vote – and changes to the immigration rules will likely worsen the situation.

However, one big issue that may arise is that, after 2020, EU citizens entering the country will be subject to the same rules that non-EU citizens currently are. This means that workers who have settled in the UK for 36 months will have to fill a Tier 2 visa application; failure to secure it means they will be required to leave.

This is a huge threat to the hospitality industry, as the Tier 2 visa application costs a proposed £30,000 and many workers simply do not earn enough to be eligible.

Kate Nicholls, chief executive of trade body UKHospitality, said this would “shrink the talent pool and hit every aspect of hospitality from hotels, restaurants and bars, to the cost of people’s morning coffee.”

A Tier 2 Work Visa is required by anyone who wants to work permanently as a skilled worker in the UK, and they will need to satisfy a number of difficult criteria to qualify. This includes a salary requirement, English language test and having a job offer from a registered Tier 2 sponsor.

For restaurants and businesses looking to employ EU migrant workers after Brexit, they must apply for a Sponsor Licence Application, which can be a costly, slow and complicated process.

According to a report by the Confederation of British Industry (CBI) last year, 96% of EU workers currently within the sector wouldn’t gain entry under the blueprinted immigration plan.

Such a significant loss of labour would be devastating for the sector, forcing many into reducing hours and axing sites altogether.

In the event of a no-deal, trade would be another area of concern for the industry. Food and drink are a huge part of the industry’s selling point. Last year alone, £48 billion worth of food and drink came from the EU - that’s 40% of the UK’s entire market. Of this, over 70% entered the UK free of tariff costs and duties.

A no-deal Brexit would force the UK to comply with the World Trade Organisation rules, which could result in huge costs for the hospitality’s supply chain. To put it into perspective, food and drink coming into the UK would have an average tariff of 27%, whereas other products face a tariff of just 4%.

In a recent survey, 73% of hospitality companies said leaving the EU would have negative consequences for the sector; with a further 3% admitting that they are planning to close because of Brexit.

The damaging impact that a no-deal Brexit would have on the hospitality industry is not hard to predict. As well as having a massive impact on access to labour, it will cause problems with trade and shackle investment and opportunities.

For the sake of the hospitality industry, the government needs to find an alternative to a no-deal Brexit.

Written by Hal Fish, content writer for the UK’s Immigration Advice Service.

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