Household finances for the majority of working age people in the UK have generally improved, which is expected to lead to boost in consumer confidence from June, according to forecasts from OakNorth Bank.
With inflation falling, wage increases holding up, and around 27m people seeing their national insurance contributions cut from 10% to 8% from April, this has put up to £450 back into consumers’ pockets this year, according to the sector lender.
OakNorth’s Hospitality & Leisure Pulse report, which takes a “cautiously optimistic” view of the sector, also highlighted a summer of sport as reason to expect a boost for the pub sector, with UEFA Euro 2024, the T20 World Cup and the Olympics coming up this year.
The bank said the Labour Party’s plan to replace business rates could be a key factor to impact the sector in the ahead. The opposition party has pledged to introduce a new system of “business property taxation” to level the playing field between high street businesses and online retailers.
Looking back over the last six months, OakNorth said alongside rail strikes, London-based operators have also suffered as a result of mass protests against the war in Gaza. Some of the businesses the bank has spoken to in recent months said they saw up to 25% less revenue than forecast in the final quarter of 2023 due to this disruption.
Meanwhile, in the last six months, the bank has reported a trend for consumers seeking out experiences “return with a vengeance” after a lull in 2023 due to cost-of-living pressures. This has benefited OakNorth clients such as Inception Group and The Alchemist.
In February, the bank provided a £15m loan to The Alchemist to support the roll-out of new sites and refinance existing debt. In the same month, the bank completed a £22m loan to Sticks’n’Sushi, a 30-year-old restaurant group specialising in sushi and yakitori, with 27 restaurants across Denmark, the UK, and Germany, as part of the deal for McWin to acquire the business.
