Pub insolvencies still at recession levels

By Martyn Leek , 10-Aug-2010

Related topics: Trends & Reports, VAT, Pubs & Bars

The number of insolvencies in the pub industry has dipped — but they are still at recessionary levels, according to Baker Tilly

The pub industry has been warned to remain cautious about further insolvencies ahead

The pub industry has been warned to remain cautious about further insolvencies ahead

The number of insolvencies in the pub industry has dipped — but they are still at recessionary levels, according to Baker Tilly.

 

The latest figures show that insolvency levels remain high in the pubs, clubs and bars sector with administrations falling slightly but liquidations still high.

 

The professional services group said there had been 115 insolvencies in the pub sector during the second quarter of 2010, down from 124 in the first quarter – but at the same level as the first part of 2009.

 

Mark Wilson, partner at Baker Tilly Restructuring and Recovery, said: “This quarter’s insolvencies levels in the licensed trade may be a modest fall on Q1 2010 numbers, but are still as high as they were in Q1 2009 at the peak of the recession.

 

“What is interesting is that Company Voluntary Liquidations (CVLs), still remain high with a 10 per cent increase from Q4 2009 to Q2 2010, although there has been a slight decrease in numbers from Q1 to Q2 2010.

 

"Administrations have nearly halved since Q4 2009 and the use of Company Voluntary Arrangements (CVAs) has remained relatively low.

Decline in pub drinking

 

“Pub drinking declined sharply in 2009, with 11 pubs closing every week in London alone, according to figures from the British Beer and Pub association (BBPA) — and hit other regions hard.

 

"While beer sales are up 2.9 per cent overall, according to the latest UK Quarterly Beer Barometer, behind this figure, supermarket sales rose almost 14 per cent whilst pub sales fell 6.3 per cent.

 

“The industry should remain cautious, particularly as the sector has been put on notice for the impending VAT hike. While they have been given time to prepare, there is likely to be some impact once this bites in the New Year.”

Martyn Leek is news editor at BigHospitality's sister publication, M&C Report.

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