The artistic director of Hampstead Theatre has warned the future looks uncertain for the pioneering venue as it faces a �94,000 budget black hole this year.

The theatre in Eton Avenue, Swiss Cottage, is a leading light in the capital’s arts scene, but it must find the substantial sum in savings over the next financial year to balance its books.

Camden Council announced last year that its �74,000 grant would be withdrawn, which takes effect next week, and the theatre must also pay business rates for the first time from April 1, which could cost another �20,000. The theatre, with a reputation for staging new writing, also lost 11 per cent of its Arts Council funding last year.

Artistic director Edward Hall admitted some of the theatre’s output may reluctantly have to be scaled back.

He told the Ham&High: “I think we’re all just trying to survive in a very complicated moment economically in our times, but the ability of us as an organisation to deliver not just the amount of theatre and art, but also work such as our education programme, is put under considerable pressure with the loss of this fund.”

Already the theatre has had to shed staff and freeze wages to avoid slipping into deficit over the last two years.

Its contribution to the north London arts scene is widely acknowledged and the venue regularly attracts leading playwrights such as Michael Frayn, Mike Leigh and Brian Friel.

Monty Python Star Michael Palin, who lives in Gospel Oak, said: “It is a wonderful theatre, well run and a good place for people to meet, and for the community as a whole.

“It would be a great shame if Hampstead were to lose it due to financial problems.”

Another leading north London arts venue, the Tricycle Theatre in Kilburn, will also say farewell to artistic director Nicolas Kent next month after his departure was triggered by a �350,000 cut to the budget.

Mr Kent said he feared the lost funding would leave him be unable to sustain the quality of work that has kept the Tricycle at the cutting edge for his 28-year reign.

But Mr Hall was adamant that Hampstead Theatre can continue to flourish in troubled financial times.

“We all understand that money is very tight,” he said. “I’m not whingeing about people not having a budget to spend on a theatre. But when you do the maths there also comes a point when unfortunately something will have to give somewhere. The one thing that we refuse to do is jeopardise the long term future of the theatre, especially considering all the great work that is beginning to happen here.”