AWith the return of Covid restrictions, British companies fear a sharp drop in sales and are urging the government to provide them with financial support. In the past ten days, due to concerns about the new Omikron variant, many planned Christmas parties in restaurants and pubs have been canceled, said Clive Watson, head of the City Pub Group. “After yesterday’s announcement, things accelerated again, and we’ve seen a significant drop in these bookings.”
Especially corporate celebrations are affected, parties with up to 50 guests, with which many companies make an important part of the total annual turnover at the end of the year.
“Not only are we not making the sales now. We also don’t build up the cash that helps us through the lean period in January and February … it’s just like switching off life support measures. “
Dining and entertainment aren’t the only industries concerned about the location. “Housekeeping, receptionists, conference and restaurant staff and retail clerks all have less work to do when people are absent,” said Frances O’Grady, general secretary of the Trade Union Congress, the governing body of the UK trade unions. She called for the rapid reintroduction of the “Furlough”, the short-time work program that the government had introduced at the beginning of the Covid pandemic, but which expired at the end of September.
Business tax relief, special loans, tenant protection and VAT rebates are part of the list of demands from Kate Nicholls, head of the UK Hospitality industry association. “Anything less would be a disaster.”
Boris Johnson recommends the home office
Given the rapid spread of the Omikron variant, Prime Minister Boris Johnson has once again recommended that workers in England work from home if possible. There are also stricter rules for wearing masks indoors. For major events, the submission of a vaccination certificate or negative test should be mandatory from next week.
In mid-July, Great Britain had practically lifted all Covid restrictions. But health minister Sajid Javid warned that there is now a risk that a million people could become infected with Omikron within a short period of time. It is therefore necessary to slow down the spread of the virus significantly.
Even before the stricter rules were introduced, many Britons had become more cautious about social gatherings. As the transport company FirstGroup reported, including a provider of bus services, the growth in the number of passengers on buses has declined noticeably in recent weeks.
In eight out of ten shops in the Pret A Manger sandwich chain, sales fell in the past week. The sandwiches and small dishes are popular lunches in offices.
Corona restrictions cause share prices to collapse
The restrictions have also found expression on the stock exchange. Shares in travel companies, pub and cinema chains started trading with significant losses. “We have turned the page of the recovery story that was played out in the financial markets this week and we are opening a new chapter telling the story of the distress of many ‘opening stocks’,” said Susannah Streeter, analyst at Hargreaves Lansdown.
At 3.6 percent, the minus for the engine manufacturer Rolls-Royce was particularly noticeable when it opened. Even before the latest Covid storm, investors were disappointed with the slow recovery of the airlines. Commercial jet flight hours were expected to end the year at 55 percent of pre-pandemic levels. The Omikron variant is now another setback.
Compared to earlier restrictions, however, the effects of the latest round on the entire British economy should remain much more manageable than the lockdowns of the past few months, say Citi analysts. They expect the new rules to weaken economic growth by 0.4 percentage points in December and by 0.3 percentage points in January. With the second dent, increasing consumer caution is likely to play an increasing role.
It is questionable whether this reluctance will have as much impact as in the past. Observers fear that the anger over the behavior in ministries and the government – where the strict Covid rules are said to have been disregarded and parties were celebrated by the end of 2020 – will lead to lower compliance.
“The timing and rationale behind this announcement has to be questioned,” said Michael Kill, chairman of the Night Time Industries Association. “Is this a thorough fact-based policy, or is it an attempt to steer the news away from the trustworthy story of the Downing Street Christmas party?”
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