Be our guest—at the unemployment bureau. Restaurants are failing faster in the United Kingdom than they did during the economically devastating COVID-19 pandemic, leading experts to predict over a third of UK “hospitality businesses” will close by 2023. I guess inflation wasn’t transitory there either.
The Guardian blamed a “‘toxic mix’ of surging energy costs, staff shortages and falling bookings” for the crisis, as restaurant closures rose 60% this past year. And it’s not just restaurants affected, according to Steve Bannon, who posted on GETTR that “50% of all British small business said they would in all likelihood close shop after the holidays— in first or second Quarter of ‘23.” Food and energy costs have gone up with inflation, which also reduced people’s disposable income, putting many restaurants and other businesses at risk of imminent closure.
UK Hospitality, the British Beer and Pub Association, and other industry groups predicted the mass restaurant closures, the Guardian reported. “Insolvencies of restaurant businesses are now happening at a far faster rate than during Covid,” Rebecca Dacre, a partner for the advisory firm Mazars, said. “It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restaurateurs have not seen this combination of negative factors before.”
Over 50% of Britons intend to cut their “essential spending,” the Guardian reported, citing Barclaycard. That means businesses, which had briefly seen an increase in business after COVID lockdowns were lifted, are unlikely to increase revenues much during the usually-busy Christmas season. And many businesses make most of their annual profits at Christmas.
“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat,” Dacre explained. “There’s a certainty of further insolvencies if they don’t receive much more support from the government, but the chances of the government fully turning on the taps is low.”
The Guardian claimed that “post-Brexit rules on migration block EU citizens from working in the UK. This has contributed to higher wage inflation.” It did not note that 40,000 boat migrants have already landed in Britain this year. Wouldn’t that theoretically mean there are plenty of workers, besides the British themselves?
The Guardian reported, ”Closures in the [restaurant] sector rose by 60%, with 1,567 insolvencies over 2021-22, up from 984 during 2020-21, according to a study by the advisory firm Mazars. The figure includes 453 over the past three months, up from 395 in the previous quarter.” Not good news for Christmas.