The Brief: UK restaurants are going bust at a much faster rate compared to the pace recorded during the peak of the pandemic. According to Bloomberg and advisory firm Mazars, bankruptcies in the sector increased by 60%, with 1,567 insolvencies between 2021 to 2022. The trend is caused by the rise in energy costs, staff shortages and lower bookings.
Why It Matters: The rise in restaurants going under reflects the impact of Brexit’s migration policies that restrict EU labor, high energy bills, and inflation eating up a huge portion of consumers’ disposable incomes.
Finanze Business Foresights: Yesterday, PM Rishi Sunak announced that the government will introduce a new energy support package once the existing relief expires in April 2023. The average annual electric bill for a typical large restaurant in the UK is around £7,234, but is nothing compared to restauranteur Tom Kerridge’s yearly cost estimated at £420,000 last September. While no specific program was mentioned to help business owners beyond April of next year, we anticipate that Sunak's plan will favour small and medium enterprises who are most vulnerable to inflationary pressures.
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