National Living Wage set to pass £13 an hour
Hospitality groups warn of a fresh cost squeeze as the UK's adult minimum wage is tipped to rise close to 4% from April 2027, ahead of Wednesday's Budget.
Britain's National Living Wage rise is expected to push the adult minimum wage above £13 an hour for the first time from April 2027, with hospitality employers warning of a fresh squeeze on already thin margins.
Chancellor John Healey is expected to confirm the increase in Wednesday's Budget, according to Restaurant. Industry estimates put the rise at just under 4%, with UKHospitality citing a figure of 3.9%, against inflation running at 3.5% in the year to September.
Who the National Living Wage rise is meant to help
A wage floor meant to lift the lowest-paid also lands hardest on the businesses that employ the most of them.
Around 330,000 hospitality jobs sit at or close to the minimum wage, according to industry estimates, making the sector more exposed to the change than most. Labour had previously pledged to accelerate rises for younger workers as part of a plan to remove age differentials in the minimum wage, though reports suggest Healey will moderate increases to youth rates this time.
UKHospitality chief executive Allen Simpson said a 3.9% rise would add pressure to businesses already facing high costs, calling it "a considerable additional burden that many businesses will struggle to absorb." He urged the Government to cut the sector's tax burden and reverse employer National Insurance contribution increases, which he said had made early-career roles unaffordable.
Business groups warn of a hiring squeeze
The CBI's chief economist, Louise Hellem, said rising employment costs had already made firms more cautious about hiring and reduced their ability to invest, with a "significant impact" on entry-level roles.
Alex Hall-Chen, principal policy adviser at the Institute of Directors, described a "crisis in the cost of employment," with businesses still absorbing last year's rise in employer National Insurance alongside higher wages. She said some employers were responding by curbing hiring and turning to automation and outsourcing instead.
None of the figures are confirmed until Healey stands up on Wednesday. For an industry already tracking falling hospitality pay elsewhere in 2026, a rise above £13 an hour would be one more number to absorb, not negotiate.
