The decision to reduce the base rate on the 6th of February 2025 was an attempt to stimulate economic growth in a stagnant economic environment. But the challenges facing the hospitality sector are far from over, according to top 30 accountancy firm, Price Bailey.
Matt Howard, Insolvency & Recovery Partner at Price Bailey, comments: “Inflation remains a significant concern, particularly in areas like food prices and wages. While the cuts are welcome, it doesn’t mean the challenges for hospitality businesses are over.”
According to recent research by Price Bailey, 21% of pubs and bars, and just over a fifth of licensed restaurants, are now technically insolvent. Of this group, over half are in the maximum risk category for insolvency.
Howard continues: “Our research shows there’s been a 17% increase in the number of technically insolvent pubs and bars in the highest risk category since last year, and a 15% increase for licensed restaurants. Businesses in the Southeast and London have been hit particularly hard—with pubs and bars in the East of England and restaurants in the Southwest also experiencing very high insolvency rates”.
The findings underscore the financial pressures facing many in the hospitality industry, highlighting the urgent need for businesses to adopt proactive strategies to stay afloat.
Economists are expecting three reductions during 2025, leaving the base rate at 4% by the end of the year. With uncertainty surrounding inflation and the possibility of economic volatility, hospitality businesses should focus on strategies that will allow them to remain flexible and resilient. Information and advice are available on the Price Bailey website, here.
