Restaurant closures in UK now ‘at epidemic levels’

Restaurant closures in UK now ‘at epidemic levels’

More than 1,000 restaurants went bust in Britain in the year through September — a 24% rise on the previous 12 months, as the industry grapples with overcapacity as consumer spending slows, accountants Moore Stephens said.

Restaurant chains such as Carluccio’s, Prezzo, Jamie’s Italian, and Strada have closed outlets in the last year, and there are few signs of any pick-up in demand.

“Closures in the restaurant sector are at epidemic levels now,” Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, said.

Moore Stephens said that 1,219 restaurants closed across the UK between September 2017 and September 2018, up from 985 a year earlier.

“In the wake of Brexit uncertainty and interest-rate rises, it seems consumers are tightening their belts and discretionary spending is the first thing to go,” Mr Willmont said.

Restaurants also faced pressure from rising wages and higher food and beverage prices due to a weak pound, Moore Stephens said.

And a new survey showed British households’ confidence in their finances hit a six-month low in December, as their earnings from employment rose more slowly while living costs increased.

The monthly Household Finance Index from financial data company IHS Markit fell to its lowest since June.

Worse conditions in every aspect of households’ finances prompted pessimism for the New Year ahead, with future financial outlook plummeting to one of its lowest readings in over four years.

As Christmas approaches and March’s Brexit deadline looms, the significant decrease in consumers’ financial health could trigger fears of a knock-on effect for the economy as a whole.

“(The) data demonstrates the negative impact that political and economic uncertainty is having on households,” IHS Markit economist Joe Hayes said.

“If sentiment continues to decline, the effect on the real economy may become more apparent in hard data if households begin to alter consumption behaviour.”

After a slight improvement last month, growth in earnings from employment slowed again in December, and was below average for the year.

Reuters

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