Hospitality leaders warn mounting costs are pushing more businesses towards closure as campaign gathers pace
Nearly one in four pubs and restaurants across Britain are now operating at a loss as hospitality businesses grapple with rising costs and higher taxes.
New survey findings from UKHospitality, the British Beer & Pub Association, the British Institute of Innkeeping and Hospitality Ulster show that 23 per cent of venues are losing money.
It marks a sharp increase from 15 per cent just three months ago.
The industry has continued to see businesses close, with an average of two pubs shutting permanently every day since January 2026.
The survey also found that one in six hospitality businesses fear it could close within the next 12 months, while five per cent of operators said their business is no longer financially viable.
Industry leaders say the sector is facing growing pressure from higher tax bills, increasing operating costs and rising business rates.
Celebrity chef Tom Kerridge has responded by launching his #VATistheproblem campaign, calling on the Government to reduce VAT for hospitality businesses from 20 per cent to 10 per cent.
The petition has already attracted more than 240,000 signatures.
Mr Kerridge, who owns the two Michelin-starred gastropub The Hand & Flowers, said reducing VAT would provide struggling businesses with much-needed support while bringing Britain's tax regime more closely into line with many European countries.
The campaign has received backing from UKHospitality, the British Beer & Pub Association and the British Institute of Innkeeping.
Campaigners are calling for a permanent reduction in VAT for the hospitality sector.
Britain currently applies a 20 per cent VAT rate to food, drinks and hotel accommodation, making it one of the highest rates in Europe.
France, Spain and Italy each apply a 10 per cent VAT rate to their hospitality sectors.
Mr Kerridge said: "Our hospitality culture in the UK is the best in the world, but we continue to be hit with unfair levels of tax. Almost every other country recognises the need to support hospitality with a lower rate of VAT".
Treasury estimates suggest reducing VAT from 20 per cent to 10 per cent would cost between £10.5billion and £12billion each year.
The projected cost has become one of the main obstacles to implementing the proposal, although some politicians have previously expressed support for examining the policy.
Andy Burnham, who has been linked with ambitions to become prime minister, has previously backed bringing Britain's hospitality VAT rate more closely into line with those across Europe.
He has argued for a VAT rate that is "more consistent with what you find in Europe".
However, the Treasury has so far rejected calls for a sector-specific reduction in VAT.
Questions also remain over whether Mr Burnham would introduce such a policy if he were to become prime minister, with his team declining to commit to the proposal.
The Government has previously faced criticism over temporary VAT measures, including a short-term reduction on children's meals, which hospitality operators argued did not go far enough to address the financial pressures facing the industry.
Industry groups continue to argue that more substantial tax relief is needed as businesses contend with rising costs and ongoing financial challenges.