One in ten pubs are at risk of closing soon, while many more are at risk than a year ago…

One in 10 British pubs are at immediate risk of closure, according to new figures that suggest the threat to the hospitality industry is growing.

About 11 percent of the total number of pubs are at significant risk of going out of business, according to analysis by accountancy firm Price Bailey.

The figures show that 7,445 pubs – 20 per cent of the total – have negative net assets on their balance sheets, meaning they are technically insolvent.

Of these, 4,410 have a Delphi Risk score in the maximum credit risk category, an increase of 930 from a year ago, when 3,380 were classified as technically insolvent and at maximum risk.

Companies at maximum risk are unlikely to access funding without personal guarantees from directors and are likely to face liquidation requests or intent to wind up in the coming year, says Price Bailey.

Pubs are under pressure from higher energy, labor and food and drink costs, while consumer demand has dampened thanks to the economic climate.

Price Bailey’s analysis shows figures show 378 pubs had to close in the first half of the year, matching last year’s record, the highest number since 2013.

The upcoming Budget is also unlikely to improve the sector’s fortunes, despite a rate cut over the summer.

A sharp increase in the minimum wage and proposals to ban smoking in pub gardens are likely to cause further pain.

Pubs could also face another rise in bills when business rates relief, introduced during the pandemic, expires next April.

Trade body UK Hospitality has warned of a ‘devastating cliff’ that could leave hospitality firms with a bill of £928m.

“The inflation rate for pubs remains stubbornly above the core figure with little sign of relief,” said Matt Howard, head of insolvency and recovery at Price Bailey.

‘If the government announces an inflation-busting minimum wage increase in the autumn statement, many pubs currently on life support are likely to go out of business.

‘Workers in the pub sector have been among the main beneficiaries of the increase in the National Living Wage, which has increased by more than 40 per cent in five years.

‘Even when pubs see an improvement in turnover, wage costs ensure that many pubs remain in the red for a large part of the trading week.’

In a bid to make ends meet, many pubs are operating shorter opening hours to control energy costs and staff shortages, meaning they cannot take advantage of any increase in demand.

Howard adds, “Many have to sacrifice long-term customer relationships at the altar of profitability because they focus on their busiest hours.”

Small independents are likely to have a harder time, but some major pub chains have received a big boost this summer.

Last week Wetherspoons reported sales growth of 5.7 per cent to £2.04 billion, while pre-tax profits rose 73.5 per cent to £73.9 million in the year to July 28.