Over 10,000 pubs and restaurants could face closure thanks to a ‘perfect storm’ of inflation, soaring energy costs and rising rents, a senior industry figure has warned.

Kate Nicholls, the chief executive of trade body UK Hospitality said the hospitality sector is facing "as big a crisis, if not bigger" than during the pandemic. She estimated that 20,000 of UK Hospitality members’ businesses are still operating below break-even and 30,000 have no cash reserves. She added:

"I’ve never seen such a toxic cocktail of costs. It is a perfect storm."

Inflation in the restaurant trade is running at 13-17% due to supply-chain disruption caused by Covid and the war in Ukraine, and higher wages due to staff shortages.

Emma McClarkin, chief executive of the British Beer & Pub Association, said:

“Cost inflation means we have to trade 20% up just to stand still. We know that keys are being handed in at some tenancies.”

Calling for a rethink on VAT, Wetherspoons boss Tim Martin said:

“Pubs and restaurants pay 20% VAT in respect of food sales, whereas supermarkets pay nothing, enabling them to subsidise the price of the beer they sell. Unless there is tax equality, the hospitality sector will lose out.”