Most hospitality businesses have raised their prices and more than half have cut jobs as they reel from Rachel Reeves’ tax onslaught.
In a report that lays bare the impact of Labour’s policies, the Chancellor was warned almost four-fifths of pubs, restaurants and bars have hiked prices to deal with extra costs.
The survey by trade bodies led by UK Hospitality also found 51 per cent of venues have slashed staff with 84,000 hospitality jobs lost since Reeves’ first Budget last October.
The report warned businesses have been forced into ‘impossible decisions’ due to ‘unsustainable’ tax hikes.
The industry is calling for radical tax changes in the upcoming autumn Budget in order to reverse a damaging wave of venue closures.
The calls came as official figures showed another 307 hospitality firms collapsed in June – the highest level since November 2024 in the wake of the Budget.
Hangover: In a blow for chancellor Rachel Reeves (pictured), a survey found almost four-fifths of pubs, restaurants and bars have increased prices to deal with extra costs
Saxon Moseley, a partner at consulting firm RSM UK, said: ‘Insolvencies continue to creep up which is a worrying, but not unexpected trend.
‘The hospitality industry has been acutely hit with higher staff costs and rising inflation, and when you overlay subdued sales, continuing to operate has become unviable for some.
‘With many operators still in survival mode, the industry is struggling and as a key job creator, particularly for younger workers, a fragile hospitality industry presents an economic headache for the UK.’
Hospitality, which includes hotels and cafes as well as bars and restaurants, saw costs rise by £3.4billion after the Budget as they faced higher National insurance contributions, an inflation-busting rise in the minimum wage and increases to punitive business rates.
With the economy stuttering and a black hole opening up in Reeves’ Budget plans, further tax hikes look likely this autumn.
Experts warn this will only make matters worse, however, with figures this week showing eight pubs have closed every week so far this year.
In a desperate plea, UK Hospitality has joined forces with the British Institute of Innkeeping, the British Beer & Pub Association and Hospitality Ulster to call for help in the upcoming Budget.
The trade bodies together said: ‘Unsustainable tax increases are squeezing businesses, stifling growth and investment, and threatening local employment, especially for young people.’
Echoing calls for respite at the Budget, RSM’s Moseley said: ‘Taking steps to overhaul the business rates system, plus supporting the industry to respond to recent tax increases would allow operators to not only weather the storm, but invest in jobs for the future.’
Business rates are a local levy based on the value of a commercial property.
The hospitality industry was hit by a £500million increase in business rates in April alongside the barrage of other costs imposed by Labour.
Before the Budget, small businesses had called for a Covid-era discount of 75 per cent to be extended to give them some breathing space.
But Labour reduced this to a 40 per cent discount, capped at £110,000 per pub.
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