Pubs closing at fastest pace in a decade as high interest rates and energy bills crush Britain’s boozers
Pubs are closing at the quickest pace in a decade and experts have warned a further wave of failures are on the way, new research out today shows.
Some 620 of Britain’s watering holes disappeared over the year to the end of March, a 68 per cent increase from the 369 failures in the same period last year, according to chartered accountants Price Bailey.
Soaring energy prices over the last year have heaped pressure on pubs’ balance sheets, as have increasing wages and a slowdown in consumer spending in response to the rising cost of living.
That has lifted pub insolvencies sharply over the last year.
However, experts have warned that the Bank of England’s 12 successive interest rate increases are poised to pump closures up even further as the year progresses.
“Rising interest rates will increasingly leave highly leveraged businesses in the restaurant sector unable to meet loan repayments. At the same time banks are clamping down harder on non-performing loans,” Price Bailey said.
A shortage of staff compounded by elevated gas and electricity prices has forced pubs to cut operating hours, meaning they are unable to maximise income from thirsty publicans.
Price Bailey also said that banks who have lent cash to pubs and bars are likely to ignore the UK economy’s better than expected performance this year and demand money be repaid quickly.
“There is often a lag between a return to more robust economic activity and declining insolvencies,” Matt Howard, head of the insolvency and recovery Team at Price Bailey, said.
“Banks will likely start to put increasing pressure on debtors to perform or pay off loans. Focus will start to shift from financially stressed businesses to startups and those with better prospects, which may mean that insolvencies continue to rise despite many pubs seeing improved takings,” he added.