Rachel Reeves' Budget Tax Raid Could Increase Price of Pint by 5p

Pub Chains to Offset Tax Hike

Rachel Reeves' Budget tax raid could add a further 5p to the price of a pint, undoing her claim to be knocking a penny off. Pub chains will be forced to increase prices to offset Rachel Reeves’s blow from hiking employers’ national insurance contributions and minimum wage bills, according to analysts.

Impact on Employment and Pub Chains

The Office for Budget Responsibility also told MPs that the move to make staff more expensive would have the impact of reducing the level of employment by 50,000 people, more than the entire workforce at Wetherspoons. Pub chains will be hit hard from the increase with analysts predicting significant financial burdens.

Financial Predictions and Challenges

Greg Johnson, analyst at City broker Shore Capital, predicted that the national insurance contributions could "add a further 5p to a pint." He warned that staffing costs are equivalent to a quarter of pub chain’s revenues and the Chancellor’s changes will mean they will rise by 10 per cent. This financial strain may lead to pub closures and a smaller hospitality market overall.

Expected Hits on Pub Chains

Wetherspoons is expected to face a £35 million extra hit while Mitchells & Butler, the owner of All Bar One and Toby Carvery, will face a £40 million hit, according to the analysis.