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British pubs and restaurants are facing increased financial pressure from rising utility costs as they struggle to keep their doors open amid an energy crisis that is only expected to get worse this winter.
“The price goes up daily,” Lindsey Armstrong, owner of Champs Sports Bar and Grill in the small northeast England town of Washington, told the New York Times about her electricity contract which will cost her $135,000 per year, a jump from the usual cost of about $30,000.
Armstrong says the shortest contract she has been offered is for three years.
“The longer I wait, the harder it gets to make a decision, but I can’t actually sign myself into a contract of that length,” Armstrong said, “because I know I can’t afford that.”
Armstrong says she is considering reducing her operating hours and cutting back on staffing but is aware that employees are also facing financial hardships from the rising energy costs, including some who are new parents.
“We’ve opened up, we’ve had a really good year, and then to have this, it’s just soul destroying,” Armstrong said, explaining that her pub has had a good year since opening up following coronavirus lock downs. “It’s absolutely soul destroying.”
James Watt, owner of the popular British brewery and pub chain BrewDog, recently told his customers on social media that the company would be closing six locations due to “spiraling” energy costs.
“Reality in the hospitality space is starting to bite and bite hard,” Watt wrote on LinkedIn.
Chief executives of six large pub chains as well as the head of the British Beer and Pub Association have called on “swift and substantial” intervention from the government, New York Times reported.
Assistance is needed or else “there is no doubt we will witness a huge number of pubs close their doors for good, leaving individuals without jobs during a cost-of-living crisis,” they wrote.
U.K. residents will see an 80% increase in their annual household energy bills, the country’s energy regulator announced Friday, following a record 54% spike in April. That will bring costs for the average customer from 1,971 pounds ($2,332) a year to 3,549 pounds.
To blame for the increase is the soaring price of wholesale natural gas triggered by Russia’s war in Ukraine, which is driving up consumer prices and roiling economies across Europe that rely on the fuel for heating homes and generating electricity.
However, electricity prices in Europe hit all-time highs months before the invasion which some experts say is due in part to increased reliance on green energy policies.
The energy increases, together with rapidly rising food costs, are expected to push inflation above the 40-year high of 10.1% recorded in July and trigger a recession later this year, the Bank of England has predicted. Charities, public health leaders and even energy firms warn of catastrophic effects on poorer people already struggling to afford essentials as wages lag behind.
The Associated Press contributed to this report