Energy crisis: British pubs may close due to rising prices

Six leading pub and brewery executives are warning that rising bills for electricity, heating and other necessities could cause many pubs and craft breweries to close, leading to a wave of job cuts as the country braces for recession.
“Across all of our businesses, we are seeing price increases that are causing irreversible damage,” they wrote in the report. letter to the British government with an appeal for immediate assistance. “The rise could now be as high as 300% in pre-pandemic electricity bills, with the current average increase of around 150% in the beer and pub sector, putting jobs and businesses at risk.”

Nick McKenzie, head of the Greene King pub chain, said one place he works with reported electricity costs up £33,000 ($38,744) a year.

“While the government has put in place measures to help households cope with this price spike, businesses are having to face it alone and things are only going to get worse in the fall,” McKenzie said.

According to Kevin Georgel, CEO of St Austell Brewery, some pubs have been asked to increase the price of annual gas contracts by more than 400%, while others have found it impossible to negotiate contracts at all.

“The cost of energy is threatening massive business failure and the loss of thousands of pubs across the country,” he added.

UK Energy Regulator Ofgem announced last week that household bills will rise 80% to an average of £3,549 ($4,159) a year from October. Chief Executive Jonathan Brearley said the next UK prime minister will need to take immediate action when they take office next week to limit the impact.

“The response must be commensurate with the scale of the crisis we face,” he said.

The situation is expected to get worse before it gets better. Energy Markets extremely volatile as traders wonder whether Russia can completely cut off gas flows to Europe when the weather turns cold and more energy is needed. United Kingdom also has less storage space for gas than the rest of Europe, which is stockpiling.

This raises concerns about the huge spending for households next year. But businesses say they aren’t getting enough help either, stressing that the crisis will leave many on life support.

“Small businesses are left out when it comes to energy bills, with the vast majority excluded from household energy price caps and other protections aimed at home consumers,” said Martin McThaigue, who leads the Federation of Small Businesses. in a statement last week.

“Unlike large corporations, small firms cannot hedge costs and make deals with their large energy suppliers. Many of our members say huge energy bills could be the final nail in the coffin as they struggle to get through the winter,” he continued.

For British pubs, this is another reason to worry about the future. For years, the industry has struggled as people ditch drinking in pubs in favor of bars, restaurants and their homes. Then the pandemic hit and the government ordered the pubs to close. for the first time in the history of the country. Pubs remained open during the First and Second World Wars to boost morale.

Now business conditions are deteriorating again.

“The UK brewing industry is facing a much bigger crisis than the one we have experienced during the lockdown in the last few years,” said Paul Davies, CEO of British brewer Carlsberg Marstons.

He noted that the cost of gas and energy has almost tripled since 2019 – and this is not the only item of expenditure that will rise. The price of malt, a key ingredient in beer, has doubled and the price of aluminum has jumped more than 50%. Brewers are also worried about carbon dioxide supplies after one of the Major UK manufacturers close factory due to the sharp rise in the cost of energy.

There were 39,973 pubs in England and Wales as of June, the lowest level on record and a drop of over 7,000 seats since 2012, according to an analysis by the Altus Group.

The real estate advisory firm said that while pubs have proven “remarkably resilient” during the pandemic despite deep uncertainty, the energy crisis and inflation are creating “new headwinds”.

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