In the News Teaching Activity – why is the average price of a pint of beer set to rise above £5? (Mar 2025)

The price of a pint in the UK is set to break the £5 barrier as pubs struggle to absorb rising costs from tax and wage hikes.

A combination of higher labour costs, increased national insurance, and reduced business rate relief is driving up expenses for pubs, forcing many to pass these costs onto consumers as higher prices. Industry leaders warn that without government intervention, the sector’s financial strain could lead to yet more pub closures, despite the vital role many pubs play in local communities. While price hikes help keep businesses afloat and could prevent some pubs shutting down, they risk driving away customers still feeling the squeeze from the cost-of-living crisis, as energy, water and Council tax bills continue to rise.

Average price of pint to surge above £5 due to April cost hikes, say beer bosses | ITV News

1. Using the information in the article, calculate the percentage increase in the average price of a pint of beer expected according to the British Beer and Pub Association & research by Frontier Economics.

2. Using a diagram, discuss how the change in costs for pubs is likely to lead to higher beer prices and more pub closures.

3. Discuss the potential external benefits and costs of pubs in the UK.