The Government’s decision not to reinstate the 9% Vat rate for the hospitality industry has been deemed a “devastating blow” for the sector, with fears that Tuesday’s move could push over 1,000 more businesses to shut in the next twelve months.
Despite strong pushes for a reduction in the rate of Vat, Enterprise Minister Peter Burke was unable to secure support from Coalition leaders to enact the move.
Reacting to the decision, the Restaurants Association of Ireland (RAI), Irish Hotel’s Federations (IHF), the Vintners’ Association of Ireland (VFI) and the Licensed Vintners Association (LVA) expressed disappointment and frustration, warning that newly announced measures fall “disastrously short” of what is needed to protect the hospitality industry.
Speaking on the decision, the RAI called it “tone deaf,” citing a recent survey finding that 74% of businesses would be forced to strongly consider closing their doors if the 9% Vat rate was not restored.
“Since the Vat rate was increased to 13.5% in September 2023, a total of 612 restaurants, cafés, gastropubs and other food-led businesses have been forced to close permanently,” the RAI said.
The Government’s decision will push over 1,000 more businesses into closure over the next 12 months, according to the RAI.
Speaking on Budget 2025, VFI chief Pat Crotty called it a disaster for the sector, adding: “We have been clear with the Government about the immense pressure pubs are under, yet they have failed to deliver any meaningful support.”
“Every minister and TD fully understands this Budget will lead to closures for a huge number of businesses across the country.”
Donall O’Keefe, CEO of the LVA said the Budget showed “how little the Government has been listening to the hospitality sector.”
President of the IHF, Michael Magner said the Budget did “next to nothing to address the enormous challenges confronting the sector,” adding that “half-baked” measures fell far short on what was needed.
As part of Budget 2025, Public Expenditure Minister Pascal Donohoe introduced an Energy Subsidy Scheme worth €170m for hospitality and retail businesses struggling with rising energy costs, which he said would provide support to 39,000 firms. This equates to around €4,300 per business.
Reacting to the measure, the RAI called it “insignificant and insulting,” warning that the measure will only cover the annual increase for 2.4 full-time employees on minimum wage.
“The €4,000 piecemeal grant constructed by the Government at the 11th hour as an alternative to meaningful action will be totally inadequate to keep over 1,000 doors of restaurants, cafés and other food-led businesses open over the next year,” said Mr Cummins.
Mr Magner of the IHF added: “At just under €77 per week, it falls so far short of what is needed, that it will have almost no impact.”
Since the beginning of 2024, hundreds of food businesses across Ireland have permanently shut their doors, with many citing spiralling costs.
Across Cork, several well-known restaurants including Nash 19 and Tung Sing have closed since the start of this year.
