Some 35 million fewer pints were sold in British pubs between July and September this year, setting the trade’s alarm bells ringing.
Pubs are already battling increased business rates and another rise in beer duty, placing them in a difficult financial position.
The warning comes from the British Beer and Pub Association (BBPA), which said the 3.6% fall is the worst dip for the period in half a decade.
Further pressure from increased beer taxes, as well as other financial burdens, could cause many more pubs to close, said the BBPA.
Duty increased by 3.9%
Pub trade representatives are urging the Government to halt further increases to beer taxes in the Budget on 22 November, following the figures from the BBPA’s Beer Barometer.
Beer duty increased by 3.9% in the Spring Budget, yet the Chancellor has plans for another increase in November, prompting outrage across the sector.
BBPA chief executive Brigid Simmonds said: “When the Government was cutting or freezing beer duty from 2013-15, sales of British beer stabilised, after years of steep decline. With sales down this quarter, following the Budget tax hike, urgent action from the Chancellor is needed.
“Beer has had a 39% tax rise in the past decade. With tax rates 14 times higher than in Germany, these levels are unsustainable.”
She added: “We need fair taxes for British beer, so that brewers and pub operators can invest in thriving pubs, and take advantage of new opportunities to export more beer around the world as we leave the EU.”
All-Party Parliamentary Beer Group (APPBG) chairman Mike Wood told The Morning Advertiser last month the group was putting forward a strong argument to lower beer duty, but claimed little could be done until after Brexit.
Whether beer duty needed to be restructured in the UK to reflect the contribution made by the on-trade would be investigated as soon as possible by the APPBG, said Wood.
‘Cannot do that within the EU’
However, he added: “Obviously we cannot do that within the EU, but from spring 2019 that would be an option that would be available to the Treasury.
“Post-Brexit, we are calling for the Government to look at allowing lower rates of tax on draught beer, for example, as well as lower rates for lower strength beers, which are also currently constrained by EU law.
“Overall, we need a more competitive excise duty regime and a cut in duty in the Budget is our key current objective, given that UK beer duty rates are three times higher than the EU average.”
Meanwhile, the Bank of England’s first increase in interest rates in more than 10 years upped rates from 0.25% to 0.5% last week.
Pubs were warned that higher borrowing costs would add pressure to the bottom line, adding further stress to the trade.