Andrew Meadowcroft: Are we talking ourselves into a recession?

It has been an eventful start to the year both in the context of this industry and the wider economy. Indeed there may be some parallels between the two, and I will come on to that later.

I will start with what is a traditionally busy and important reporting season for the listed companies. These results were perhaps awaited with greater interest this time in light of the well-documented challenges currently facing the sector. In truth, there were no huge surprises, with a generally downbeat but far from catastrophic message being delivered.

Common themes among the statements included "difficult environment" and "tough market" as with trends indicating the first quarter of 2008 could be especially challenging.

However at the same time there were some positive noises with regard to adapting to changing spending habits, strong food sales and working with tenants. Indeed, some operators have been so bold as to shrug off the negative sentiment and talk of strong sales and a positive outlook.

This is where I see the parallel with the wider economy as a whole. There has been much volatility in stock markets across the world in recent weeks.

At the same time, the Scottish & Newcastle (S&N) board has agreed to recommend a £7.8bn cash takeover from Carlsberg and Heineken, representing a 25 per cent premium on the S&N share price before the consortium declared its interest.

There is much discussion in the media as to the severity of the economic climate and the direction that it's heading, with opinions very much divided. The same could be said for the licensed trade sector.

In the end, a lot comes down to confidence. If somebody feels confident, they will be more inclined to spend, but unfortunately the shock headlines in the newspapers regarding recession and property slumps do not help.

It is easy to believe what we read and there is a danger in talking ourselves into a recession or in the same way believing our pubs will never recover from the current challenges.

Someone once said a fallen soufflé is only a risen omelette and, as has always been the case, there are opportunities for those astute and brave enough to follow them through.

Further consolidation, as I suggested in my last column, cannot be ruled out and S&N was always unlikely to be the only news item on the subject this year, and so it proved - although perhaps sooner than I might have anticipated - with the activity seen around Mitchells & Butlers over recent days.

Indeed, S&N is a good case in point. It is one of the last big UK breweries, replaced in the 1990s (following the implementation of the Beer Orders) by a new breed of pub operating companies and a rejuvenated number of regional brewers benefiting from the demise of the then major brewing companies.

Pubs generally have been improved beyond recognition in this time and while some commentators might still prefer to look back to the days of smoke-filled pubs with fondness, time has to move on.

In the same way, we should be confident that this industry will move on from its current challenges and flourish.

I leave you with a quotation from George Bernard Shaw, who once said "progress is impossible without change, and those who cannot change their minds cannot change anything".

Andrew Meadowcroft is head of licensed trade, Barclays Commercial Bank​