Wetherspoons warns chancellor business tax rises risk fuelling UK inflation

Britain’s hospitality sector faces renewed inflationary pressures as JD Wetherspoons chairman Sir Tim Martin issued a stark warning to the Chancellor regarding proposals for further business tax rises. Sir Tim contended that recent increases in employer taxes and environmental levies would unavoidably stoke costs, warning these changes are now “umbilically linked” to persistent inflation across the UK economy. He cautioned that higher taxes on businesses will inevitably force companies to upstream price increases to customers, even if some attempt temporary restraint.

JD Wetherspoons is already navigating a swathe of fresh cost challenges. The pub group revealed it is absorbing a £60 million annual blow resulting from minimum wage hikes and National Insurance adjustments introduced in April. Additionally, the company faces a £2.4 million impact from new recycling levies, as well as more punitive energy costs following £7 million in stealth taxes linked to the government’s drive towards renewable energy and expanded standby generation. These levies are being used to finance both new nuclear power capacity and energy-intensive sector support, a direction that Sir Tim noted is being questioned by several countries as the UK’s costs spiral.

Sir Tim argued that it is overdue for Britain to have a robust public debate over these broad policy shifts and their economic consequences, instead of relying on “tit for tat political discourse” and poorly targeted, short-term stealth taxes. His comments come at a critical time, with business leaders across multiple sectors now urging Chancellor Rachel Reeves to rule out additional corporate tax hikes in the forthcoming Budget, given mounting inflationary headwinds and eroding consumer confidence. Tesco chief executive Ken Murphy recently joined this chorus, flagging the increasing difficulty retailers face in shielding customers from underlying cost increases.

KPMG’s latest consumer confidence survey underlines industry concerns, recording its lowest reading this year as households grow anxious about further price rises. Chancellor Reeves has not ruled out potential tax changes, but she emphasised the importance of maintaining an “internationally competitive” regime and stressed that businesses, like all contributors, must support the broader economy through taxes.

Despite the tough operating environment, JD Wetherspoons reported a ten per cent jump in pre-tax profits to £81 million for the year to July, with like-for-like sales up five per cent. Sir Tim remains cautiously optimistic for a solid annual performance but flagged that the persistence of government-influenced cost surges, especially in energy, could weigh on future results.

The hospitality sector’s challenge highlights the broader economic stakes as the government weighs up fiscal policy ahead of the Budget, with inflation, business viability and consumer sentiment all hanging in the balance.