Record number of pubs forced to call last orders as 'perfect storm' caused by soaring costs and weak demand hits

7 August 2023, 12:41 | Updated: 7 August 2023, 16:32

By EJ Ward

UK pub closures have reached decade highs as soaring costs and weak demand create a "perfect storm" for the industry. Insolvencies jumped 80% in the past year, with the pub trade now experiencing its fastest rate of closures in over 10 years.

The UK pub industry is facing its biggest crisis in over a decade, as soaring costs force hundreds of pubs to shut down.

The news comes as customers will soon only be able to drink on-site, as the government plans to end pandemic measures allowing takeaway pints will start on 30 September.

Introduced in 2020 to help struggling pubs stay afloat during lockdowns, takeaway alcohol sales were meant to be a temporary lifeline. But many pubs and punters grew fond of the takeaway pint, seeing it as an extra revenue stream and convenient option.

Despite this popularity, after a consultation which drew just 174 responses, the government has decided to let the takeaway alcohol rules expire. Industry groups call the move disappointing and overly bureaucratic.

Read more: Last orders for takeaway pints as huge change to pub laws will see the practice banned

According to new data from accounting firm Price Bailey, 223 pub businesses entered insolvency in the second quarter of 2023, the highest quarterly figure since before the 2008 financial crisis.

Over the past year, 729 pubs have gone out of business, an 80% jump compared to the previous 12 months.

Experts say this sharp rise in closures is driven by a combination of factors, all squeezing pub finances.

Energy bills have surged since government support started to be phased out at the end of March.

At the same time, wages, food costs and drinks prices have all increased significantly, putting pressure on thin profit margins.

With household budgets also stretched by the cost of living crisis, customers have cut back on going to the pub.

Aggressive interest rate hikes by the Bank of England have added to pubs' problems, making it harder to service debts. According to Matt Howard, head of insolvency at Price Bailey, pubs are facing a "perfect storm" of soaring costs and weak demand.

Experts warn insolvencies and closures in the pub trade will likely accelerate in the coming months, as the economic climate remains extremely challenging.

The UK pub industry is experiencing its fastest rate of closures in over 10 years.

Emma McClarkin, Chief Executive of the British Beer and Pub Association said: "Our pubs remain at the centre of a perfect storm pushing the people running them to make incredibly tough decisions.

"For the past few years, pressure has been building on our pubs, from the pandemic shutting down trade, straight into an energy bill crisis and eye-watering inflation and a cost-of-living-crisis, staff shortages and supply chain issues, and finally last week’s rise in alcohol duty.

"For some these trading conditions have understandably become too much and they’ve made the incredibly tough decision to shut their doors, a loss to both our economy but also ending the vital role so many of our pubs play in their communities.

"It is essential that the Government rules out any further duty increases, permanently reduces the unfair tax burden on pubs, and swiftly enacts Ofgem’s recent recommendations to ensure our sector can properly recover from almost three and a half years of debilitating economic conditions.

"Our pubs must be given the opportunity to not only survive at the heart of our communities but thrive there."