Surveys paint bleak picture for UK pubs

The immediate trading prospects for the on-trade appear grim, if two new surveys on business survival and consumer spending are to be believed.

Pub insolvency rates are down, according to new research from consultancy firm PricewaterhouseCoopers (PwC), but a slowdown in consumer spending could tip more pubs and pub-owning companies into the abyss.

PwC found that the insolvency rate in the pub sector appeared to peak in the last quarter of 2009, when 88 pubs businesses - not individual pubs - failed.

PwC said the rate of failure dropped by 32 per cent in the second quarter of 2010. But it warned the level of collapse was still "comparatively high", up nearly 10 per cent on 2008's figures.

David Chubb, a partner at PwC, said: "Pub company insolvency rates have fallen from where we were a year ago - but trading remains difficult and further failures are expected as lenders consolidate their positions.

"The insolvency stats do not fully illustrate the extent of the problems in the sector as much underlying restructuring activity continues. Even without entering insolvency creditors may still experience pain."

Meanwhile, despite the freeze on alcohol duty in the recent emergency Budget, pubs and bars could be hit by a new cutback in household spending, according to new research from pollsters GfK NOP.

More than a third of people polled by the organisation said they would cut back on eating out and drinking in pubs in the face of government cuts and tax increases.

Nearly 60 per cent those polled believed the economy would worsen before it improved, with 42 per cent saying they would spend less money on going out drinking, while 39 per cent would eat out less.

Ivan Browne, consumer products and retail expert at GfK NOP said: "It is ironic that a reduction in consumer spending - driven by economic uncertainty - could in fact bring about the thing people are most concerned about: a dip back into recession."