Britain faces crisis as pubs and restaurants vanish amid tax hikes and wage pressures

Britain’s hospitality sector is facing a severe downturn as more than 1100 pubs and restaurants have closed since Chancellor Rachel Reeves’s October Budget. Recent data from CGA and AlixPartners shows that bars, clubs, pubs and restaurants are closing at a rate of two per day with 1122 venues shutting just since last October. This sharp escalation in closures follows heavy increases in employer costs introduced in the Budget which primarily affected National Insurance contributions and minimum wage levels.

The headline rate of employer National Insurance was raised from 138 percent to 15 percent and the payment threshold dropped from £9100 to £5000 per year. For hospitality firms this means they must now pay employer National Insurance on many parttime staff wages which were previously exempt swelling costs across the sector. Industry estimates suggest this change alone has added £1 billion to hospitality wage bills while a 67 percent minimum wage increase has piled on a further £19 billion in annual costs.

Kate Nicholls of UKHospitality highlighted how these government-driven cost pressures are hollowing out high streets and local communities. Independent businesses described as the sector’s lifeblood are struggling most under the weight of these new tax and employment burdens. Since the Covid pandemic began in March 2020 Britain has lost more than 16000 licenced venues leaving the UK with just 98746 pubs restaurants and clubs.

With business rates changes due to hit large premises harder the outlook remains bleak for major chains and pubs with significant footprints. Leading pub groups like JD Wetherspoon and Fuller’s have warned higher levies will trigger more closures and drive customers towards home consumption. The British Beer and Pub Association predicts one pub will close every day this year if conditions persist.

Recent figures show restaurants have borne the brunt of recent closures with 633 lost in the year to June 2025 including more than 100 casual dining chain branches and 326 gastropubs. Ms Nicholls has called for urgent decisive action from the government to reduce the financial strain on a sector she describes as having the potential to power significant economic growth and job creation.

Despite the government citing record levels of business confidence and efforts to support hospitality through measures like alcohol duty cuts and reforms to business rates industry leaders argue these steps fall far short. The current wave of closures underlines the unprecedented threat facing hospitality and the need for policy makers to urgently address the tax and wage environment before irreparable damage is done to communities and high streets nationwide.