Covid: ‘A lot of chatter in Westminster’ says Kuenssberg
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Figures from the Office for National Statistics also showed a slowdown in activity underway, with an increasing number of businesses pessimistic about being able to survive the winter. The ONS said there had been a fall in credit and debit card usage, a small decline in high street footfall and a drop in the number of seated diners in restaurants to the lowest level since lockdown restrictions were first eased in May.
Meanwhile, in a survey, seven percent of businesses said they had low or no confidence that they would be able to stay open in the next three months, up from four percent in October.
It’s also unclear whether flagship economic schemes such as furlough and government business loans will be back on the cards – but Chancellor Rishi Sunak observed last week: “We’ve always acknowledged there could be bumps on our road to recovery.”
But businesses are pleading with the Government to ramp up support and the CBI has called for the Government to instruct councils to release unused grants and rates relief for businesses that need it.
While the effect of Omicron and potential further restrictions is unclear currently, it’s highly likely the economy will crunch, and businesses could be biting the dust sooner rather than later.
How a ‘lockdown by stealth’ will devastate UK businesses – expert (Image: GETTY)
The hospitality sector has suffered tremendously from the pandemic (Image: GETTY)
Lawrence Kaplin, Chief Market Strategist at international business payments platform Equals Money, told Express.co.uk: “Stark warnings from UK Chief medical officer Chris Whitty combined with the CBI estimating hospitality industry revenues will take a hit of 40 percent in December are a reminder of how uncertain the medium-term economic outlook has now become.
“The recent tightening of Covid restrictions and new Government recommendations regarding socialising have had a huge and immediate detrimental effect on the service sector, accounting for 80 percent of UK GDP.”
The advice from Professor Whitty urging the public not to “mix with people you don’t have to” has caused a ripple effect, with Brits heading the advice and heading indoors, resulting in mass cancellations that will begin to show in upcoming economic data.
The CBI has said revenues for businesses could take a hit of up to 40 percent this month, in what would usually be the busiest time of the year.
Interest rates were at 0.1 percent – the lowest ever – until December 2021 (Image: EXPRESS)
Mr Kaplan continued: “The CBI’s description of a “lockdown by stealth” is, unfortunately, proving to be correct.
“With many sectors still yet to recover to pre-pandemic levels, any further tightening of Covid restrictions would prove to be a devastating blow to business and, in some cases, a fatal one.
“Recent data from the Office of National Statistics showed the UK’s economic recovery slowing even before the onset of the Omicron strain.
“This was further reinforced by yesterday’s data showing the growth rate has fallen to its weakest since February, with travel and hospitality showing the steepest declines.
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No Government support has been promised in the event of another lockdown (Image: GETTY)
“No additional Government support measures have been made yet, although Chancellor Sunak was due to meet with trade representatives from the hospitality sector.
“The CBI has called for instruction from the government to tell councils to immediately release unused grants and rates relief to businesses in need.”
The news the Bank of England has raised interest rates from a historic low of 0.1 percent to 0.25 percent has put further pressure on businesses that have borrowed heavily over the past two years to stay afloat.
Mr Kaplan continued: “After recent data showed inflation running at decade long high and the real threat of a cost-of-living crisis, the bank had been under pressure to make a move to prevent 2nd round inflation effects from taking hold.”
Inflation is now at 5.1 percent, the sharpest annual rise for a decade and well above the Bank’s target of two percent, heralding further misery for businesses in the UK.
A Treasury spokesman said: “As we have done throughout the pandemic, we are closely monitoring the impact of the virus on the economy – and particularly the hospitality sector which is why the Chancellor is meeting with representatives from the industry today.
“Our £400 billion Covid support package will continue to help businesses well into spring next year and of course we will continue to respond proportionately to the changing path of the virus.”