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Hospitality insolvencies jump 59%

Published:  20 September, 2022

The latest insolvency figures show just how hard the hospitality industry has been affected by the cost-of-living crisis and soaring energy bills, with pubs, bars and restaurants some of the worst hit among UK businesses.

According to new figures from the Insolvency Service, the UK has recorded a total of 20,000 company insolvencies in the year to 31 August – a 72% rise on the year before.

The hospitality sector has been hit especially hard. During that time, insolvencies of pubs, bars and restaurants have increased 59%, from 1,354 to 2,156. A total of 216 businesses have filed for insolvency in the last month alone (+37%, from 158 in July).

The closures are widely believed to be a direct symptom of rising energy bills, which have spiralled since the start of the year.

However, Adam Harris, partner at accountancy firm Mazars, said, “the scale and pace of these insolvencies is especially concerning”.

He added that the hospitality sector is facing an “unusually challenging environment as the cost-of-living crisis hits them from both sides. Just as their energy costs are spiral and their interest costs rise their customers are cutting spending on non-essentials such as eating out”.

Prime Minister, Liz Truss announced plans for an energy cap on 8 September, in order to ease the strain on businesses. However, the cap – which begins on 1 October and lasts for six months – has proved too late for many.

Now, all eyes will be on the upcoming Autumn Budget, when the government is expected to announce its new energy package in full.

Back in early September, Truss promised to offer “equivalent support” to businesses as to households going forwards.

Whatever this entails, it will be “key to determining whether many businesses survive,” Harris said.

“Unless the picture dramatically changes, we are likely to see many more businesses close their doors in the months to come.”