SO it’s official: the UK economy has slipped into the much-dreaded double-dip recession for the first time since 1975.
According to the Office for National Statistics, gross domestic product (GDP) fell by 0.2% in the first quarter. Taken in conjunction with the 0.3% fall in GDP in the last quarter of 2011, which followed a brief return to growth, it means the recession is now of the double-dip variety.
I’ll leave the in-depth analysis to those better qualified than me, but I do wonder how this latest development will affect the Scottish licensed trade.
In some ways it looks like it’s been a positive start to the year. It’s far from a robust economic measure, but it does seem that there’s been more activity going on this year in terms of refurbishments and new openings than last year.
And it’s not just confined to one particular part of the market: in the past few months we have reported on major hotel relaunches and developments, as well as upgrades and launches of independent bars and restaurants.
Recent tourism figures have provided cause for optimism, thanks in part to the number of people from the UK holidaying in Scotland and a welcome return of visitors from North America. According to combined data from the ONS and the Great Britain Tourism Survey, there was a 10% rise in the number of overnight visitors to Scotland in 2011, many of whom will have spent money in pubs, bars and restaurants.
Looking ahead to the rest of the year, there are many opportunities for operators to boost sales. Some will come on the back of major national occasions like the Queen’s Diamond Jubilee and the Olympics, others from the myriad food, drink and entertainment festivals that venues are hosting themselves (see page 12 for details).
While these are certainly grounds for encouragement, the trade is still facing an uphill battle in other respects.
The latest Beer Barometer from the British Beer and Pub Association found that beer sales in pubs were down 6% in the first quarter compared to the first three months of 2011, a downturn attributed to persistent hikes in duty over recent years.
There’s also no evidence of bank lending to small and medium-sized businesses being restored to a helpful level following the financial crises of 2008.
Last week The Herald quoted the Bank of England’s Trends in Lending report as saying that “lending growth for all SMEs has been negative since late 2009”.
With so many factors in the mix, and with so many operators reporting varying trading circumstances, the task of assessing the outlook is only slightly less complicated than analysing the accounts of Rangers FC.
But what does seem clear is that many consumers have significantly altered their spending habits since we first entered recession, as evidenced by the rapid take up of daily deals websites.
People have become used to paying less for drinks, meals and rooms. For the sake of the trade, I just hope the news of the double-dip doesn’t cause them to keep an even tighter grip on the sporran.