Pubs Under Pressure

MPs have warned that recent and upcoming measures could be the final nail in the coffin for many pubs, as the House of Commons voted to increase alcohol duty in line with inflation. Pubs have been faced with a toxic cocktail of challenges in recent years, including increases in employer social security, the minimum wage, energy costs, business rates, inflation, new workers’ rights laws, and now an increase in alcohol tax.

The Impact of Alcohol Tax Increase

The alcohol tax increase will come into force from February 1, after MPs backed the government’s finance bill, which will implement policies announced in the budget. This increase has raised alarms among many, including Labor figures, who are working on a package for pubs that could help them with business rates. According to Ryan tax specialists’ analysis of government data, one pub per day was permanently closed in England and Wales in 2025.

Pubs Closure

A further 540 pubs are set to close this year, according to new modeling from UKHospitality. This has raised concerns among many, including Labor MPs, who expressed concern about the pressure pubs are facing. Years of multiple challenges have left many venues operating on very slim margins, if at all. A brewery in one area was facing a 450% rise in business rates, and there were calls for a "realistic, workable solution" from the government.

Government Response

The government has been accused of "punishing" the hotel industry by "piling cost on top of cost". The UK’s longest-serving and most senior MP warned that rural pubs are in real danger due to plans to lower the legal drink-driving limit. The government must understand that rural pubs are in real danger because of these alcohol limits. The Mayor of Greater Manchester has called for business rates to be rebalanced and was in favor of “relief for high streets and pubs in particular”.

Rising Prices

Pubs will continue to be affected by rising prices, with Diageo increasing the price of Guinness and Smirnoff from April. The price of Guinness Draft will rise by 5.2%, equivalent to around 4p per pint. Price increases this year will add further pressure to a sector that has already seen more than 15,000 pubs close between 2000 and 2024.

Sector Confidence

A new survey shows that businesses were more pessimistic at the end of 2025 than they have been in three years, and that their sentiment worsened after the budget was published. The survey showed that confidence fell from September to December. The finance minister told MPs that the government wanted pubs to “thrive” and would work with the sector to identify what support was needed. She defended the alcohol tax move, saying continuing the freeze would primarily benefit shops and supermarkets rather than the hospitality sector.