6 days ago
- Business
- The Herald Scotland
Scotland's pubs facing 'brutal' trading conditions
The Scottish On-Trade Market Insight Survey Report found 56% of outlets reported a decline of more than 10%, while 14% are either closing or seriously considering shutting the doors for good – up from 6% in January. Moreover, for more than 50% of outlets surveyed, trading was down compared with last year, although 26% said business was in line with 2024.
The survey offers the first major gauge of sentiment in the Scottish hospitality industry since operating costs were increased significantly with the rise in employer national insurance contributions and national living and minimum wage, which took effect in April.
Fellow trade body UKHospitality Scotland has calculated that the increases, announced by Chancellor Rachel Reeves in the Autumn Budget as a means of boosting the country's struggling finances, will amount to a £3.4 billion rise in annual costs for the industry. According to the SLTA, the rise in costs has had an impact on employment and opening hours, with nearly one-third of outlets cutting staffing levels. Around two-thirds of outlets reported cost increases of more than 10%, the survey found.
The SLTA, which canvassed more than 350 pubs, bars, restaurants, and hotels, declared the continuing challenges facing the hospitality sector – from rising costs to the fragile economic backdrop and weak consumer sentiment – are writ large in its report. Nearly six in 10 (59%) of operators said they expect to be loss making this year, as 90% expressed an expectation that the Scottish economy will decline.
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Colin Wilkinson, managing director of the SLTA, said the new findings are the 'most negative' the organisation has seen in the 10 years it has been carrying out the survey.
He said: 'We have spoken repeatedly about the many challenges Scotland's licensed hospitality sector continues to face. In recent years, it navigated the stormy waters of Brexit, the Covid pandemic, rising utility bills, and the ongoing cost of living pressures that have impacted on businesses' operating costs and consumer spending.
'However, in the 10 years that we have been conducting our market insight surveys, these findings are the most negative we have seen – these insights are extremely concerning and the only word to describe the current trading conditions is brutal. There has never been so much business uncertainty.
'Spiralling costs to businesses from the Chancellor's hike in employers' NICs [national insurance contributions] in the Autumn Budget, which took effect in April alongside increases in the national living and minimum wage, are having a devastating impact on Scotland's pubs, bars, hotels and hospitality venues.
'Businesses are reporting lower income as a result of current low consumer confidence and reduced footfall – and, of course, we continue to call on the Scottish and UK Governments to work to support one of our key industries. The most effective way to achieve this is by reducing VAT [value added tax] in the licensed hospitality sector and an urgent review of the commercial rating system in Scotland.'
The SLTA repeated its call for a change of direction by the Scottish and UK Governments to support the industry, and made its case for the reform of business rates and a reduction of value-added tax for the sector.
Mr Wilkinson added: 'It is more important than ever that the Scottish Government finally accepts that hospitality is one of Scotland's key industries and plays a crucial role in tourism, economic prosperity and employment.
'So, it comes as no surprise that respondents to our survey have voiced major concerns about the economy, and the economic policies of both the Scottish and UK Governments – well over 90% do not think their policies are aligned to growing their businesses. With 59% of outlets expecting to be loss-making in 2025, the outlook is not positive.
'Ahead of the Holyrood election in 2026, we asked respondents what is the biggest single thing that they would like all parties to include in their manifestos, and rates reform, to bring Scotland at least into alignment with the rest of the UK was the biggest issue, with notable mentions for hospitality work visas and promoting the hospitality sector.
'The increase in employers' NICs has impacted staffing and opening hours, with nearly one-third of outlets cutting staffing levels, our survey insights reveal. Add to the equation the ongoing regulatory hurdles and bureaucracy that businesses have to deal with on a daily basis and it's no wonder that many owners are at the end of their tether.'
