ONE-third of restaurants and one-quarter of pubs in Scotland are at risk of going bust in the next 12 months, according to new research.

A total of 625 restaurants (33.8%) and 288 pubs (26.7%) in Scotland may face closure in the coming year as the economic crisis shows little sign of improving.

The analysis by insolvency trade body R3 also shows 103 restaurants and 63 pubs are at a high risk of failure as diners and drinkers tighten their budgets.

John Hall, Scottish R3 council member, said: "These figures are shocking but perhaps not surprising.

"We have already seen that the retail and hotel sectors are vulnerable, so it is to be expected that other areas of discretionary spending such as restaurants and pubs will be susceptible to the continuing economic downturn and lack of confidence among Scottish consumers. The total of 625 restaurant businesses and 288 pubs which may face closure within 12 months is an alarming indication of just how badly the economy continues to perform.

"Individuals are worried about the security of their jobs, of their homes, and of their future finances in the form of pensions.

"All of these factors are contributing to an entrenched siege mentality, which encourages austerity and discourages non-essential spending. The result is that the sectors which cater to discretionary spending are suffering."

He added: "It is likely that many more businesses reliant on discretionary spending will continue to experience difficult trading conditions for the foreseeable future."

Paul Waterson, chief executive of the Scottish Licensed Trade Association, said the introduction of the smoking ban in 2006, together with tough trading conditions, was contributing to the decline of the industry.

He said: "It's a very difficult time for everybody at the moment, but especially for public houses."

He added that he hoped the introduction of minimum pricing on alcohol would help the industry.

Ryan James, chairman of the Glasgow Restaurant Association and owner of the Two Fat Ladies restaurant, said the insolvencies would bring enormous job losses.

He said: "If these hundreds of restaurants and bars do go, it will be a massive loss of employment. The restaurant trade offers a huge amount of entry- level jobs.

"Most of the restaurants in Glasgow are independently owned so each closure will be a personal tragedy. Then this tragedy will go on to hit staff and suppliers. The repercussions are huge."