Scots pubs and eateries at lower risk of insolvency

The robust performance of Scotland's pubs and restaurants has kept up the pace since the start of the year despite growing fears of a squeeze on consumer spending amid rising inflation, according to an influential report.

Scotland's pubs have the UK's lowest risk of going bust. Picture: Ian Rutherford
Scotland's pubs have the UK's lowest risk of going bust. Picture: Ian Rutherford

The study from UK insolvency and restructuring trade body R3 said that, just as in January, latest figures in March show that public houses in Scotland were rated “as being the least likely” of any UK region to enter insolvency.

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R3 said the latest figures showed that 17 per cent of pubs north of the Border were judged as being at higher than normal risk of insolvency against a UK average of 21.1 per cent.

Scottish restaurants, meanwhile, kept their second-lowest ranking in the UK of higher than normal risk of insolvency, registering 21 per cent.

That was just above 20.9 per cent in the north-west of England, but 1.5 percentage points lower than the UK average of 22.5 per cent.

It was also a more positive position for Scotland taking all business sectors into account, with 19.9 per cent of all Scottish firms deemed at higher than normal risk of not being able to pay their debts, compared to 24.9 per cent in the UK as a whole.

Tim Cooper, chairman of R3 in Scotland and a partner at HBJ Gateley in Edinburgh, said: “Scottish cuisine is ­gaining an international reputation, while our pubs are no less renowned, so it’s great to see their financial outlook remaining strong. Whatever else is happening in the world, Scots know the benefit of a good meal out, or a drink with friends.”

The figures in R3’s latest insolvency risk tracker are partly based on companies’ balance sheets and director track records to assess their likelihoood of survival over the next 12 months.

However, Cooper added: “An issue to watch out for is the incoming business rates changes, which will have a particular impact on pubs and restaurants.

“It remains to be seen whether the Scottish Government’s relief measures will do enough to cushion the impact of the rise. Businesses in the sector to need to avoid complacency and should seek advice sooner rather than later if a rates rise is causing problems.”

The pubs and restaurants industry was seen as particularly vulnerable to the commercial knock-on effects when the smoking ban was introduced in Scotland in 2006 and England and Wales a year later.