Business distress statistics - pub and football club failures ‘threaten British culture’

The latest Begbies Traynor Red Flag Alert statistics, published today (20 April), shows that Britain’s beleaguered pub trade has joined football clubs to become among the country’s most distressed business sectors.

Statistics released last month by Begbies Traynor showed that football clubs were experiencing 19 times the average levels of business distress in the country after a number of high-profile failures and administrations.
Today new figures show that the local pub is hit hardest of all businesses in the first quarter of 2012 according to the latest distress figures from January, February and March this year.

The quarterly figures show that pubs and bars are suffering more than any other sector, with a massive 95 per cent increase in critical problems since the last numbers were published in January this year, when compared to an average fall of 7 per cent in critical distress levels across all business sectors, and a significant fall in distress levels among manufacturing firms.

“The social implications of sustained distress in the football club and pub sectors is concerning because the failure of these businesses has a social impact far beyond the failure of a typical business,” said Julie Palmer, partner at Begbies Traynor.

“Across the UK, 50 pubs each week are closing for good. As well as these closures taking their toll on jobs and supplier contracts, many rural or suburban communities also struggle to replace the community resources that the pub represents.  Perhaps it is a fact of life as legislation and economics impact the sector, but the local pub is further down the road to becoming obsolete,” she added.

According to the quarterly Red Flag Alert Survey, manufacturing businesses saw some improvement in their fortunes, with falls in distress levels across firms involved in food and beverage manufacturing and even the printing and packaging sector performing better than previously.

Significant problems in the property services, construction and utilities contractor sectors in the past quarter indicate that while the private sector has surfaced from the depths of the economic turmoil, public spending cuts are still hitting many companies hard as long-term infrastructure and construction contracts are held over or shelved.

Recent years have seen the biggest ever shake up of the licensed trade, and have left many pub companies unable to keep up with the changes in consumer behaviour.  More at-home drinking by increasingly less affluent young people and students, once the staple customer of pubs and bars, is compounding a run of social reform that has seen the smoking ban, escalating taxes on alcohol and the cost increases tied to longer opening hours erode the fortunes of pub companies.

“The fact that pubs, football and other sports clubs are on their uppers is not simply a matter for economic concern, as these once thriving hubs of community and regional identity are part of the fabric of British society, and once lost can never be replaced.  Whether you view that as a good or a bad thing, the fact is it will, in the long term, change the character of the country as a whole and this should be recognised,” said Ric Traynor, chairman of Begbies Traynor Group.   

Although combined business distress levels are up 55 per cent from the last survey in Q4 2011, the overall year-on-year total of instances of distress is down 17 per cent, a welcome sign that the impact the manufacturing sector is making on the economy is helping to slow the rise in business distress levels overall.

Critical problems by Sector: