The introduction of the National Living Wage, unseasonable weather, England’s early exit from the Euros and the recent Brexit decision have all added significant pressure to the UK’s pubs and bars this summer, reveals new data from Begbies Traynor, the UK’s leading independent insolvency firm.
According to Begbies Traynor’s Red Flag Alert research, which monitors the financial health of UK companies, the number of pubs and bars which were dissolved in Q2 2016 increased by 53% to 831 compared to 531 in Q2 2015. Worryingly the research suggests that there will be no respite for the sector as one in five pubs and bars (21% or 2,754 companies out of 13,211 trading businesses) faced significant financial distress at the end of Q2 2016 compared to 17% a year ago.
British pubs and bars had been hoping for a boost from a bumper summer of sport including the Euros, Wimbledon and the Olympics. However England’s early exit and subsequently Wales’ from the Euros, combined with the dip in consumer confidence following the UK’s decision to leave the EU have been unwelcome results for the industry, which is already struggling to make ends meet.
Julie Palmer, Partner at Begbies Traynor comments:
“The knock on effect of England and Wales’ exits from the Euros and the damage to consumer confidence in light of the current economic and political uncertainty, means the UK’s pubs and bars face serious challenges ahead that could result in more business closures or failures over the coming months.
“In addition, the longer term impact of the introduction of the National Living Wage remains to be seen but, given the sector’s model of tight margins and low cost staff, many businesses are already struggling to cope with the increased costs. Given the current financial state of many of the UK’s pubs and bars, many could be forced to either cut staff to reduce costs or face falling into the red.
“While England going out of the Euros would have been more disappointing to this sector than most, Andy Murray’s recent win at Wimbledon, the upcoming Olympics and the possibility of an Indian Summer, should give this sector a much needed boost.”