Wetherspoons has urged for common sense to prevail at the Budget after a sharp rise in employment costs and business rates hit profits.

Sir Tim Martin, chair of the pub group, urged the Government to refrain from more tax hikes, which has already led to the ‘dereliction’ of the high street.

‘The hospitality industry, as many commentators and companies have noted, has borne the brunt of government-led tax and regulatory cost increases, especially in the last two budgets,’ he said.

‘This has resulted in pubs becoming even more expensive than supermarkets, leading to job losses, closures and high street dereliction.’

A boost in sales thanks to the warmer weather failed to offset a 5.3 per cent jump in costs, with pre-tax profits plummeting by 28 per cent to £58.6million for the year to July 26.

‘Common sense and economic principle surely indicate that a sensible rebalancing of taxes would generate more jobs and more revenue for the government,’ Wetherspoons told investors.

Martin has repeatedly flagged substantial cost rises eating into the group's bottom line and today said rising energy, repair and employment costs had had a 'heavy influence on most other input prices' and 'rose more than sales'.

The pub chain said the cost of employing its 42,000 staff at its 792 pubs across the country jumped £46million in the year to July 26, while repair costs surged £31million and its business rates bill increased by £9million.

Martin added: 'It is to be hoped that the powers-that-be will refrain from any further increases, since pubs and restaurants pay around 40 per cent of their receipts as taxes of one sort or another - and provide immense financial support to the Treasury, as well as social support to the community.'

The hospitality giant reported a 5.2 per cent jump in total sales for the year, with like-for-like sales growth of 4.2 per cent.

It was driven by a 6.1 per cent jump in bar sales, while food sales and revenue from its hotel rooms rose 1.2 and 1.3 per cent, respectively. Fruit machine sales rose 7.4 per cent.

Wetherspoons said it had been boosted by ‘exceptional weather’, pushing like-for-like sales 8.6 per cent higher in the nine weeks to September 27.

It said it benefited from ‘substantial progress’ to increase the number of beer gardens and outside seating areas across its pubs.

Shares rose 7.38 per cent to 873p, bringing this year's gains to 17.5 per cent. 

Richard Hunter, head of markets at Interactive Investor, said: 'Wetherspoon had previously warned that higher costs would place a large stain on profits, and the prediction has unfortunately played out although the group remains resolute in its ambitions.'

He added: 'Spoons has been dealt some difficult hands over the years which, for the most part, it has been resolute in turning into profit.

'The group’s value model leaves it continually bumping up against a wall of higher costs, which puts perennial pressure on margins and profits.'