Hospitality challenges ‘far from over’ despite BoE rate cut

The decision to reduce the base rate on 6 February was an attempt to stimulate economic growth in a “stagnant” economic environment but the challenges facing the hospitality sector are far from over, Price Bailey has warned.

According to recent research by the accountancy firm, 21% of pubs and bars, and just over a fifth of licensed restaurants, are now technically insolvent. Of this group, over half are in the maximum risk category for insolvency.

The findings underscore the financial pressures facing many in the hospitality industry, highlighting the urgent need for businesses to adopt proactive strategies to stay afloat.

Economists are expecting three reductions during 2025, leaving the base rate at 4% by the end of the year. 

The research found that with uncertainty surrounding inflation and the possibility of economic volatility, hospitality businesses should focus on strategies that will allow them to remain flexible and resilient.

Matt Howard, insolvency and recovery partner at Price Bailey, said: “Inflation remains a significant concern, particularly in areas like food prices and wages. While the cuts are welcome, it doesn’t mean the challenges for hospitality businesses are over.

“Our research shows there’s been a 17% increase in the number of technically insolvent pubs and bars in the highest risk category since last year, and a 15% increase for licensed restaurants. Businesses in the Southeast and London have been hit particularly hard—with pubs and bars in the East of England and restaurants in the Southwest also experiencing very high insolvency rates.”