The report from Frontier Economics also suggested energy bills were 300% higher than pre-pandemic levels and tax pressures were causing the sector to struggle.
Predictions of another cold winter and price volatility due to geopolitical tensions mean the industry are also expected to contribute to the sector’s fragility.
The hospitality industry is also set to face a £12,000 business rates increase and a beer tax hike.
BBPA chief executive Emma McClarkin said: “The crisis our pubs and brewers are facing in paying their sky-high energy bills never went away, and the cliff-edge faced earlier this year as the Government withdrew support means pubs will again face a struggle to afford to keep the lights on and the bar warm this winter.
“Meanwhile, they also face on average per pub a £12,000 increase in business rates next April and a tax hike of an unknown amount. These are economic circumstances no sector could wholly survive.”
Energy prices
BBPA has urged the Government to extend small business rates relief, rule out an increase in beer duty and implement the recommendations of Ofgem’s review of the non-domestic energy market.
According to McClarkin, these measures would help return pubs to the “invaluable engines of truly nationwide economic growth” they have the potential to be.
Energy prices are the top reason for pub closures. Despite this, the Government significantly scaled back support for pubs earlier this year, with energy bills estimated to be almost £20,000 higher over a year as a result.
Frontier Economics associate director Tim Black added: “The economic pressures facing the pub and brewing sector remain substantial, as our latest report shows.
“Record cost inflation has had to be passed on through higher prices for businesses to survive, despite consumers cutting back on spending due to severe cost of living pressures.
“While inflation rates have eased, costs and prices are not expected to fall back to earlier levels, and consumers continue to face very tight budgets.
“Meanwhile as Government support measures on energy and business rates tail off, and alcohol duty is raised, this creates further cost pressures to manage.”
Mitigate and adapt
He said the sector was working to mitigate and adapt, but some business failure was inevitable. He added that it may be important to look for areas where targeted support can help to offset the worst of this, given the key role the sector plays in communities across the UK.
Pub closures are rising sharply, with the number of closures in the first half of 2023 almost as high as in the entirety of the year before
There has been a 43% overall cost increase for pubs since 2019 however, the Frontier Economics report outlined beer has only increased in cost by 12% in the same period.
This is half of what other consumer goods have increased on average, as pubs and brewers have absorbed the wider cost increases so that they can to keep beer affordable for customers.
