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Energy prices soar and providers shun hospitality

Hospitality businesses across the UK are being refused energy contracts from suppliers, according to the British Beer and Pub Association.

The sector has faced energy issues throughout the pandemic but these are becoming “increasingly worse” the trade group said. 

The Russian invasion of Ukraine has exacerbated the situation. The Financial Times this week reported that the global economy could soon face “one of the largest energy supply shocks ever” and that the renewable energy transition could be derailed.

UK pubs and bars are already reporting increases of 150% or more on pre-pandemic energy bills, with an average above 100%. This represents a potential £800m additional cost for the sector.

“The pub and brewing sector is at a pivotal point in its recovery and the erosion of margins is impossible to sustain,” said BBPA chief executive Emma McClarkin. She called for a “more pragmatic approach” from the energy regulator, providers and the government.

Prices for food and drink are expected to rise. In a UKHospitality survey published in February, 47% of operators said they would be forced to increase prices by more than 10% this year. Prices are expected to rise 11% across the sector.

As well as complicated application processes, risk premiums and significant up-front renewal deposits, there has also been an increase in the number of utilities providers refusing to take on new accounts or renew contracts if they are linked with hospitality, BBPA said.