Largest GDP slump in 300 years ‘another indicator’ of pub and brewery devastation

While the UK avoided a double dip recession​ after registering 1% growth in the final quarter of the year, 2020 saw the biggest annual drop in GDP since the Great Frost of 1709 when the economy shrank by 13%. 

This saw food and beverage service output from venues such as pubs almost halved (48%) while alcoholic drink manufacturing fell by a third (33.9%) according to the ONS.

The figures announced by the ONS followed sales data for the past 12 months published by the British Beer & Pub Association (BBPA), which showed that beer sales in pubs dropped by 56% in 2020 – a fall of £7.8bn​. 

Additionally, output from the accommodation and food services sector is now 51.8% lower than last year according to ONS figures, which also found hospitality sector closures acted as a brake on the UK’s Q4 growth rate, dragging quarterly growth down 0.95% to 1% as sector sales fell by a third. 

“These latest GDP figures are yet another indicator of the devastation our pubs and breweries across the UK have faced through coronavirus, lockdowns and severe restrictions,” a BBPA spokesperson said. 

“After nearly a year of being forced to close, or open but under severe restrictions, the numbers will come as no surprise to publicans across the country for whom the real, material impact of these numbers are being felt.” 

‘Things cannot continue as they are’ 

The trade association added the ONS’ latest figures make the need to establish a clear reopening date and stimulus support for pubs all the more urgent. 

“Things cannot continue as they are,” the BBPA spokesperson added. “Local pubs and breweries have been burning through cash and building up debt for months, communities across the UK are fast running out of hope that their local is going to survive. 

“Thousands of pubs and hundreds of thousands of jobs continue to hang in the balance whilst we wait for clarity on exactly when and how pubs reopen.

“If measures aren’t announced on 22 February in the Government’s recovery roadmap providing the clarity our sector needs on when it can reopen, as well as support it needs to survive until then, we fear things could get even worse,” the continued. “Even when pubs do reopen, they will need a stimulus package of support to kick-start them again.”

The BBPA added that “all eyes from the sector” will also turn to Chancellor Rishi Sunak ahead of his Budget on 3 March​.

“He must do the right thing and combat the worrying trend of these numbers by delivering the financial support package our sector needs,” they said. “That means a beer duty cut for brewers and pubs, an extension of the business rates holiday and an extension to the VAT cut for hospitality. 

“Now more than ever people need hope of social reconnection in the near future. Reopening pubs, as the heart of the community, will allow families and friends to reconnect with each other in a welcoming, safe and regulated place – something we have all missed.”

‘When hospitality struggles, the entire UK economy struggles’ 

Additional analysis from UKHospitality (UKH) in the final quarter of 2020 showed a 54% drop in sales across hospitality in 2020, equivalent to a drop of £71.8bn – making the sector responsible for one-third of the UK economy’s annual £215bn contraction according to the trade body.

While UKH chief executive Kate Nicholls described the latest figures as making for “bleak reading", she added that they drive home the importance of hospitality as an economic force. 

“When hospitality struggles, the entire UK economy struggles,” she said.

“The huge losses we have suffered this year account for one-third of the slump for the whole economy last year. This really hammers home the importance of, and need for, a healthy hospitality sector for the entire country.

“If we are capable of having such a hugely detrimental impact, we are just as capable of a hugely beneficial one, though.  If our businesses are given the support they need to survive the remaining months of the crisis and put in a position to thrive again, they can drive the recovery of the nation.

“Hospitality must be prioritised for support and put at the heart of the Government’s plans for reopening the country,” Nicholls continued. “If we are given a chance to do what we do best, we can kick-start the economy and provide investment and jobs in every region of the UK. 

“If the Government gives us an extension of the VAT cut and the business rates holiday at next month’s Budget, then we will be in a much better position to help turn things around. The statistics published this morning show that there is really no other option for the Government than to back us totally.”