Tourism suffered the biggest cost increases of any industry after the Budget

Britain’s pubs, restaurants and hotels saw the fastest rise in costs of any business sector last month, after being hit by tax and pay changes in the October budget.

Tourism and leisure businesses also implemented the steepest price increases of any industry monitored, according to Lloyds UK’s latest Sector Tracker.

Hotel companies and trade bodies have warned that the Labor government’s budget could lead to more job cuts and store closures.

Chancellor Rachel Reeves announced that the cashback hotel operators enjoy on their business rates bills would be reduced from 75 per cent to 40 per cent, with discounts limited to £110,000 per business.

Employers will also pay a 15 per cent National Insurance levy on staff salaries over £5,000, instead of the current 13.8 per cent tax on salaries over £9,100.

And the national living wage will rise by 6.7 per cent to £12.21 an hour, while the minimum wage for 18-20 year olds will rise by 16.3 per cent to £10 an hour.

Since these measures were unveiled, pub chains including JD Wetherspoon, Fuller’s and Young’s have warned of multi-million pound cost impacts.

Lloyds UK said the level of cost increases imposed by tourism and leisure businesses last month measured 67.5 in its index, compared to 66.3 in October.

Any number above 50 indicates an overall measured increase from the previous month, and a figure below 50 denotes a drop.

Only two of the 14 sectors monitored by Lloyds did not raise prices in November, the same as the previous month.

Lloyds also found that companies’ future production expectations fell to their worst level in almost two years.

Among the industries with the largest contractions in production are healthcare, with a score of 40.8, followed by metals and mining, with 42.3, and household products manufacturing, with 42.7 .

The number of companies that said inflationary pressures could affect their future business also rose to more than nine times the long-term average (9.23 in November versus 3.45 in October).

Nikesh Sawjani, senior economist at Lloyds in the UK, commented: “Declining production expectations and rising inflation concerns are a reflection of the headwinds businesses currently face.

“As we approach the end of 2024, businesses are already planning and preparing for what they hope will be a strong start to the New Year.”

The UK’s inflation rate rose to 2.3 per cent in the 12 months ending in October, just above the Bank of England’s 2 per cent target.