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The hospitality sector could be hit by a £1.9bn cost increase due to direct wage rises.

UKHospitality said employers’ National Insurance going up at the same time as the minimum wage rising could be very costly at a “precarious time” for the out-of-home sector.

The new budget measures would create “collateral damage” according to UKHospitality CEO Kate Nicholls, who said jobs, future investment and business viability were in the firing line.

“Our companies desperately want to be able to support higher wages for staff but what is being asked of them is simply unsustainable if taxes are going to shoot up at the same time,” she said.

Nicholls added that the new costs would inevitably result in price increases for consumers, and called for business rates to be reformed in order to soften the blow.

“It’s paramount that the budget includes targeted measures to support the high street and the cost burden it is facing.

“That must start with addressing the broken business rates system and implementing a lower, permanent and universal level for hospitality.”

Employers’ National Insurance contributions are due to rise by 1.2 percentage points to 15%, but the threshold for companies to start paying National Insurance will also change, from £9,100 to £5,000.