A rise in VAT in the hospitality sector could leave pubs and other venues with a “minefield” of challenges as they seek to remain profitable despite numerous rising costs.

Speaking to the BBC, chairman of the City Pub Group chain Clive Watson warned that the decision in the Spring Statement to return the cost of VAT on services in hospitality venues to 20 per cent, having previously reduced it to 12.5 per cent to help during the pandemic, will force prices up for customers.

This, of course, comes with a significant risk, as consumers who are already feeling the pinch from the rising cost of living in so many other areas may decide to cut back on trips to pubs and restaurants, leading to reduced profits.

Firms looking to avoid this may be wise to seek advice on profit improvement measures that can help them cope with this squeeze.

While the Treasury is insistent that the 12.5 per cent rate was always just a temporary measure, Mr Watson argued now is a bad time to revert to the old level.

“I know the chancellor’s got to recoup the money to pay for Covid but he shouldn’t be suffocating industries that have suffered that badly,” he remarked.

“As companies try and emerge from Covid a lot of them will just fall by the wayside because of this cocktail of cost increases.”

City Group has already raised prices by four per cent and will do so again from April 1^st, but not every hospitality provider may feel comfortable doing so or be able to carry on attracting custom, such as those based in areas where much of the local population is on low incomes.

In addition, City Pub Group is a large chain that has options smaller traders do not have, such as the leeway to raise extra revenue by selling off some of its outlets.

This week saw City Group do just that, divesting six sites and raising £17.1 million in the process.