After months of lobbying, relief campaigns and mounting concern, Rachel Reeves’ Autumn Budget 2025 has finally landed, and the reaction from the hospitality sector is one of mixed frustration. While it's not as bad as many feared, most see the measures as another blow to an industry already under strain. With alcohol duties rising, VAT left untouched at 20%, and labour and supply costs continuing to increase, pubs, bars and restaurants are warning that continued price hikes and closures are inevitable. And yet, select operators are due to benefit from permanently lower business rates.
Some 750,000 UK operators will benefit from a 5p discount on business rates, but many feel this support arrives too late, and too selectively, to be meaningful. It applies only to retail, hospitality and leisure venues with a rateable value under £500,000, and while it sounds like a positive step for neighbourhood restaurants, pubs, and independent cafes, it’s outweighed by pressures elsewhere, including within the budget itself.
From April 2026, the National Living Wage is set to rise by 50p per hour to £12.71, with an even steeper increase of 85p per hour for workers aged 18–20. Alcohol duties will climb in line with inflation, energy bills continue to rise, ingredient costs remain expensive, and despite significant campaigning, VAT remains unchanged.
According to Kate Nicholls, chair of industry trade body, UKHospitality: ‘A 5p business rates discount is simply not enough to offset these costs and redress the damage it will do to business viability and job opportunities.’
What’s more, properties valued above that threshold will pay more, meaning your large chain brands, premium restaurants, and meals at high-rent city-centre properties are likely to become even more expensive. Often well-financed, these larger operations will be able to take a more long-term view, compared to high street independents. This, Nicholls warns, ‘risks creating a two-tiered economy.’
The Autumn Budget also raises employment concerns. Since the Autumn 2024 budget last year, 50% of all job losses nationwide relate to the hospitality sector. And while increases to the living wage put a much-needed £900 back in people's pockets, further losses are expected.
What used to be a regular night out could soon feel like a luxury, and for some local restaurants and pubs, ‘last orders’ might come sooner than hoped.
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