In July 2026 Liverpool corporate lawyer Paul Abrams told LBN investors were defying a tough economy by continuing to support hospitality – but he fears the latest Budget could have a chilling effect on the sector. Tony McDonough reports
Liverpool corporate lawyer Paul Abrams says Chancellor Rachel Reeves’s latest Budget could have a chilling effect on the Liverpool city region hospitality sector through 2026.
In July Paul, a lawyer for Liverpool firm Gregory Abrams Davidson (GAD), said that despite pressures due to lower consumer spending, the market for the buying and selling of businesses such as restaurants and takeaways was “buoyant”.
He explained at the time: “Location counts and the fundamental part is the innovation. The buyers see the value in the type of food being served. Where I live there is a market that has done really well and its model has been replicated elsewhere.
“Those types of businesses are busy and if you get the food right and you get the right location, then people will come. My clients see the value in investing in businesses such as those… I am mainly dealing with real value that investors are keen to take a chance on.”
As 2025 draws to a close Paul insists the market for SME hospitality deals remains “resilient”. He added: “The broader UK M&A market, where 2024 saw public megadeals (over £1m) surged to 17 from just four in 2023, with aggregate value rising from £19bn to more than £50bn.
“In the first half of 2025, total UK deal value was £57.3bn across 1,478 transactions despite a 19% fall in volume, while mid‑market activity broadly held steady as private equity continued to target consolidation into 2026.”
However, Paul now fears that the Chancellor’s latest budget could tip the market the other way into 2026. According to trade association UK Hospitality, the sector annually generates £140bn in revenue, £54bn in tax receipts and employs around 3.5m people.
Yet hospitality M&A has shown resilience, with deal volumes up around 40% year-on-year in 2024 and a record 62 deals completed in Q4 alone, even as rising costs and policy uncertainty are expected to put the sector under renewed pressure into 2026.
In Liverpool city region the visitor economy is now worth more than £6bn a year with a big chunk of this figure generated by hospitality.
Since Employers National Insurance Contributions NICs were raised in the October 2024 Budget, it is estimated 130,000 jobs have been lost in the sector. It is feared increases to the National Minimum Wage and National Living Wage will further put the squeeze on.
Employment costs make up over half of hospitality operating costs totalling £40bn in wages and employment taxes. Latest minimum and living wage changes will raise the wage bill by £3.5bn.
It is also estimated that the Chancellor’s increase to business rates will cost the industry a further £224m a year. Paul Abrams told LBN: “Hospitality entrepreneurs and investors are a hardy and resourceful bunch.
“Despite the tough economy since COVID they have continued to innovate and pioneer fresh approaches to food and drink. Customers appreciate a good offer and they will spend on the right offer.
“However, there are only so many times you can shave margins before a business becomes unsustainable, no matter how good the product or service. I fear we are at that point now for many ventures heading into 2026.
“Broader M&A sentiment is cautiously positive going into 2026, with easing and stabilising interest rates expected to support renewed activity, in contrast to hospitality’s ongoing margin squeeze.
“I know hospitality entrepreneurs who will weather the storm and will continue to try to prosper in a tough market but should it really be this hard?”
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Paul is backing UK Hospitality’s call for a permanently reduced business rates multiplier, temporarily reducing the rate of employer NICs and reducing the rate of VAT on hospitality, leisure and tourism to 12.5%.
“Investors don’t mind risk and they are invariably up for a challenge but there is a feeling at the moment that a sector that is already dealing with subdued consumer spending and higher costs deserves a break heading into 2026,” he added.