UK restaurants view the end of tariffs with reservations and ask for relief on taxes and payroll

Garlic, cucumbers and plant-based milk are among more than 100 products set to become cheaper in the UK with the removal of import tariffs announced in the Budget, according to BBC Business. The British Treasury calculates that the measure saves a typical family around £21 a year on their food bill. The value is modest, but the discussion goes beyond it: the government chose to alleviate imported inputs and products, and not payroll charges, which is precisely the point raised by the sector.

Not all restaurant entrepreneurs welcomed the measure with enthusiasm. Some questioned the real effect on the business itself and argued that cuts in VAT, value-added tax, or changes that make hiring employees cheaper would have helped more. The disagreement, then, is less about the direction of policy and more about the scale of relief.

Morgan Austin, operations manager at Burgerism, said the removal of tariffs on cucumbers was good news. The company has six main sites and opened its first in Salford in 2018. Austin, 26, said he would like to see more significant support for the hospitality sector, including a reduction in VAT.

The problem she points out is the fixed cost. According to Austin, increases in the minimum wage and employers' National Insurance contributions made after the previous Budget cost Burgerism around £150,000 a year. For her, the amount is “a big blow” to a company that is not huge, and this money could finance a new unit, with more places for young people.

Austin also said the measures didn't go far enough for medium-sized companies looking to grow. At this point, the criticism is not the tariff cut itself, but the general design of the package, which, in her view, left intact the costs that burden those who already operate and intend to expand.

From the liberal perspective that guides this newspaper, the case summarizes a fiscal policy choice: reducing input prices through tariffs or reducing charges that affect hiring and consumption. Tariffs are a one-off relief, which can be reversed by another government decision. Labor charges are a permanent cost for those who create jobs. The BBC report does not provide data on the fiscal impact of each alternative, which leaves this comparison open.

What changes for the investor

The report does not mention publicly traded companies or sector result indicators, so there is no basis for estimating a direct effect on the shares of restaurant or food chains. The point that deserves attention is the relative weight of the cost lines. Tariff reductions affect specific inputs, while increases in the minimum wage and employer contributions are recurring expenses that the company pays every month. Those who analyze this type of business usually look at the operating margin and payroll evolution before giving weight to specific relief in inputs. This text is not a recommendation to buy or sell assets.

Automatically translated from Portuguese.