From February next year, alcohol duty rates on non-draught products will rise in line with the Retail Price Index (RPI). According to Bloomberg, shares in some of the UK’s largest pub groups saw an uptick following the government’s announcement of the 1.7% cut in duty on draft alcoholic beverages, translating to a reduction of 1 pence on the price of a pint.
JD Wetherspoon Plc saw its shares increase by as much as 4.4%, while Marston’s Plc rose over 7%. Meanwhile, Mitchells & Butlers Plc, which operates brands like Harvester, climbed by up to 4.8%.
Also read: UK minimum wage to rise by 6.7% next year, exceeding inflation
Pubs and restaurants had been apprehensive as they faced potential inflation-related increases in the UK’s minimum wage and a rise in employers’ national insurance contributions, a significant payroll tax.
The hospitality sector expressed concerns that these changes could lead to job cuts and higher prices. In Wednesday’s budget, Chancellor of the Exchequer Rachel Reeves confirmed the planned wage increases and tax hikes but mitigated the impact by reducing the duty on draught alcohol and extending business rates relief for retail and hospitality sectors.
This marks the first budget from a Labour Party government in nearly 15 years and the first ever presented by a female finance minister.
Rachel Reeves has promised that the budget will aim to put “more pounds in people’s pockets” while stimulating economic growth, though the government has conveyed a rather bleak outlook regarding public finances.
Also read: UK minimum wage to rise by 6.7% next year, exceeding inflation
Prime Minister Keir Starmer cautioned that the budget will expose “the harsh light of fiscal reality.” The centre-left Labour Party was elected on July 4, vowing to end years of turmoil and scandals associated with Conservative administrations, revitalise the UK’s economy, and repair strained public services, particularly the National Health Service.
The current government contends that raising taxes and restricting public spending increases are essential to “fix the foundations” of an economy they believe has been weakened by 14 years of Conservative rule.
In contrast, the Conservatives maintain that they left behind an economy that was experiencing modest growth, with lower debt levels and a smaller deficit compared to many other Group of Seven (G7) nations.
(With inputs from agencies)
(Edited by : Jerome Anthony)
