Pub insolvencies increased sharply in the UK during the second and third quarters of the year, as the sector was hit by rising tax and wage costs. The increase also comes after the sector had seen a fragile recovery at the beginning of the year.
According to new analysis from accountancy firm Price Bailey, 219 pubs in the UK entered insolvency during Q2 and 189 in Q3, compared to 163 in Q1. Price Bailey’s data showed that there were 84 pub insolvencies in June 2025 alone, the highest monthly figure recorded in more than a decade.
The surge in pub insolvencies coincided with rising costs and an increase in inflation. In April 2025, employer National Insurance contributions increased from 13.8 per cent to 15 per cent, while the national living wage rose from £11.44 per hour to £12.21 and inflation increased 3.5 per cent.
According to Price Bailey, despite expectations of a delayed impact from price hikes, hospitality operators came under “severe and immediate pressure”.
Matt Howard, Head of Price Bailey’s Insolvency and Recovery Team, said: “Many pubs had already exhausted their financial buffers and simply couldn’t absorb the additional costs.”
“The combination of rising payroll costs, energy prices and inflation is proving fatal for pubs operating on thin margins. It’s not just pubs feeling the pinch - consumers are too. Tax rises are eroding disposable income, leaving households with less to spend on leisure. That’s a double hit for pubs: rising costs on one side and falling footfall on the other.”
According to Howard, high wage costs will mean that many pubs will remain in the red even if turnover improves, adding that the sector was “being reshaped by necessity”, with many cutting kitchen hours and limiting their opening times to the most profitable periods.
Price Bailey also conducted research into the credit risk scores of all the 37,045 pubs and bars across the UK, finding that more than 4,700 are both technically insolvent (having negative net assets) and rated as maximum risk on the Delphi credit scale. This represented a 14 per cent year-on-year increase.
Matt Howard warned that this situation meant many pubs were likely to face winding-up petitions over the coming year and added that even innovative market entrants were not immune to adverse market conditions.
He commented: “While theme pubs and experiential venues continue to expand selectively, we’re also seeing site closures and operational pauses. Traditional models are under strain, and even new formats must navigate rising costs, shifting consumer habits, and local viability. The challenge now is not just survival, but adaptation.”
Check out our PDF guide for an in-depth look at the process of finding and buying distressed assets
Find out more about the challenges facing the hospitality industry:
Hospitality optimism tempered by budget fears
Drop in hospitality insolvencies could prove temporary
Situated in Tyne and Wear, this well-established dental practice features three surgeries and offers a mixed NHS and private service.
LEASEHOLD
This is an exceptional opportunity to acquire a successful Italian restaurant and takeaway located in an affluent residential area of Leeds.
LEASEHOLD
Starting their operations in the year 2009, this company is a supplier of paints, primarily to the motor industry. However, since their inception its client base has expanded to include those in other industries such as the agriculture and building t...
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.