The British Beer and Pub Association (BBPA) has warned that the average price of a pint is set to increase by as much as 21 pence when the impact of October’s Budget changes take effect next month.
The culmination of the changes means pubs will have to raise the price of a pint of beer to maintain their “punishingly slim margins” independent analysis by Frontier Economics commissioned by the BBPA found.
The April cliff-edge will see Business Rates relief cut from 75% to 40%, an increase in Employer National Insurance rates, a decrease to the threshold at which businesses pay NI, and significant increases to the National Minimum and Living Wage. The sector will also be impacted by the Extended Producer Responsibility (EPR) packaging reform.
The net cost of Autumn Budget announcements across the beer and pub sector is approximately £650m in total.
While prices differ around the country, especially in London, where the UK average price is far exceeded, the pre-Budget average pint price was £4.80. The higher costs faced by businesses are expected to drive up the cost of a pint to an average of £5.01.
Emma McClarkin OBE, Chief Executive of the BBPA, commented: “The cumulative impact of these taxes and regulations is now plain to see, and it is highly unfortunate that the only way many pubs can remain viable is to pass on the array of upcoming costs to consumers.
“No one wants to see the cost of an average pint increase by a further 21p and break the £5 average pint barrier that will be required for pubs to maintain their punishingly slim profit margins.
“It is more urgent than ever that Government looks at ways to cap or reduce the costs-of-doing-business so we can keep pubs open, preserve their community value, and make sure the price of a pint remains affordable for all.”
The BBPA is calling on the government to urgently review the new packaging fees, deliver meaningful business rates reform, and phase in new employment costs which are all adding to the price of a pint.
While the Budget announcement of a 1p duty cut on draught products and lower utility costs offered some relief, the new policies are expected to drive up costs in 2025.
Tim Black, Associate Director, Frontier Economics, said: “The beer and pub sector has shown real resilience through a tough few years – navigating the pandemic, the energy crisis, and the cost-of-living squeeze.
“Trading conditions are still challenging, but businesses have adapted. There are signs of improved sentiment and fresh investment as extreme pressures ease and consumer confidence slowly picks up.
“But more headwinds are coming. The sector is at the sharp end of a wave of policy changes that will push up costs – higher wages, increased National Insurance, reduced business rates relief, and new packaging rules. The cumulative impact will be significant. It’s vital that policymakers recognise these pressures and ensure the environment supports investment and growth.”
NAM Implications:
- If the government had a genuine interest in supporting hospitality…
- …the signs would have been evident by now.
- Hospitality businesses and their customers will be forced to conclude otherwise.
- Meaning outlet closures to a point where those remaining are profitable.
- Inevitable…
