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Pubs and restaurants are warning of closures and a tough Christmas ahead if Rachel Reeves’s budget this week raises taxes and ends a Covid-era relief on business rates.

Reeves is expected to reveal a tax-raising budget on Wednesday, to pay for improved public services, with Labour sources indicating the government is intending to raise taxes and cut spending by a combined £40bn. Businesses across the economy are bracing for higher taxes, which could dent consumer spending.