The country’s pubs and bars could be facing a 50% drop in business over the coming months, according to a new report.

The DCU report warns that reduced demand as a result of higher unemployment and lower earnings could put 22,500 jobs at risk.

It finds that it could be 2023 before the labour market bounces back to pre-COVID conditions.

The report was commissioned by drinks industry bodies as part of the ‘Protect our Pubs’ campaign.

The campaign is calling for VAT to be slashed to 9% for food and drinks businesses.

Pictured Social Distancing in place in Toners Pub on Baggot Street in Dublin, 04-07-2020. Image: Sam Boal/Rollingnews

Report author, DCU economist Anthony Foley, said the move would protect thousands of jobs in the coming months.

“The basic finding of that is that it would cost €143m in terms of Exchequer resources if that was done on a temporary basis for August to September.

“It is basically proposed on a temporary basis to deal with, what you could call the dire business circumstances and restraints imposed on the licensed trade, primarily because of COVID and to a lesser extent because of the recession.”

He said the 50% drop in business for the rest of this year is the report’s “most optimistic market expectation.”

Mr Foley said the current VAT rate for the sale of alcohol in pubs is set at 23% - and noted that an amended EU directive has made the reduction to 9% possible.

He noted that similar moves are underway in countries like Spain, Italy and Cyprus.

Licenced Vintners Association CEO Donall O’Keeffe said current rules mean nearly a third of the revenue generated by alcohol sales in pubs is “taken by Government and diverted from customers, staff, entrepreneurs and investment.”

“This very large tax burden is not justifiable in the exceptional circumstances we are in faced with - a severe national and sectoral economic situation - caused by Covid-19,” he said.

“All businesses must adapt and adjust to the new reality which the drinks and hospitality industry has done.

“Now, Government and the Exchequer must adjust its tax expectations accordingly and support one of our key domestic industries.”

The vintners Federation of Ireland, Padraig Cribben said thousands of jobs are at “permanent risk” in the sector.

“Most bars will reopen with only 40% of their customers, indefinitely. Pubs closed for four months and are continuing to experience the harsh realities of the pandemic, taking the necessary precautions, and adapting accordingly,” he said.

“Government policy needs to adapt too. A reduction in the VAT on alcohol would deliver an immediate support to these businesses and instantly improve their commerciality, supporting the initial recovery phase and survival of pubs over the next few months as demand is reduced and costs increase.”

He said failure to act now could see many bars closing their doors for good.