Credit crisis piles on pressure

With the panic over Northern Rock, and the uneasy feeling that something worse is just round the corner, licensees and industry bosses are staring nervously at the Great British Pub Goer and wondering just when all the financial gloom will start to affect drinking and eating habits.

Common sense says soon. Levels of indebtedness have been rising to staggering levels, which are only serviceable when interest rates are low.

They may stay relatively low, if only to avoid bringing about the nightmare economic collapse that we all dread. But they're certainly edging up quite significantly in immediate response to the worldwide credit crunch. And hundreds of thousands of home owners are currently coming off fixed-rate deals and must now fork out much more each month.

For some, it will prove too much and house repossessions will rocket. The housing market, which has fuelled the consumer boom of the past decade, will inevitably slow and re-mortgaging become less easily available to distressed debtors.

Many licensees are looking at the crisis as debtors themselves, with large loans to service and mountainous credit-card bills. For them, the crisis threatens to become a vicious circle. Customers stay away or don't spend so much - so income drops. But the bills go on getting bigger and bigger.

Pubcos know many of their lessees and tenants are already under real pressure. What's coming down the line could tip many over the edge and see a hail of returned keys and even more temporary managers installed, with all the damage that does to a pub's local standing.

Of course, many people believe pubs are well positioned to ride out the economic storm. And, certainly, people have to eat and drink, and pubs may well find they're serving people who used to eat in smart restaurants or top-range gastropubs.

But when money is tight for millions of people, going out at all starts to be a more considered decision. And when you're hard up, going to a tatty pub in winter, where you can't smoke inside, is not so attractive an option any more when the bank manager keeps writing to you about your overdraft.

Hopefully, there will be no full-blown disaster and things will settle down quickly. But surely the days of easy credit and ever-rising house prices are over. And pubs must learn to make themselves the only option when harder-pressed punters venture out.