U.K. Businesses Welcome £1 Billion ‘Breathing Space’ From Covid Support Package
(Bloomberg) -- U.K. businesses welcomed the “breathing space” provided by a 1 billion-pound ($1.3 billion) government-support package to help offset a collapse in sales as households shield against the omicron coronavirus variant. But they called the assistance only a “starting point.”
Chancellor Rishi Sunak is handing hundreds of thousands of eligible hospitality and leisure companies across Britain one-off grants of as much as 6,000 pounds per premises in an attempt to rescue pubs and restaurants that have seen bookings plummet.
There’ll also be more than 100 million pounds for companies in the food supply chain, and more than 30 million pounds for museums and theaters -- taking the package to 970 million pounds. In addition, small and medium-sized businesses will be able to claim statutory sick-pay rebates for staff.
Rain Newton-Smith, chief economist at the Confederation of British Industry, said the chancellor had “provided welcome breathing space” that will “help keep the economy open as we learn to live with the virus.”
Shevaun Haviland, director general of the British Chambers of Commerce, called the measures a “positive starting point” but “if restrictions persist or are tightened we would need to see a wider support package.”
The government has told people to work from home where possible, wear masks in indoor public spaces and provide proof of vaccination or a negative test to enter nightclubs. With omicron rapidly spreading through the population, households are choosing to cancel bookings and stay home to protect their Christmas plans, dealing businesses a devastating blow.
The hospitality sector, in particular, is struggling. Industry Group UKHospitality said pubs and restaurants have lost 40%-60% of their December trade in what’s traditionally a key month.
“This is a generous package building on existing hospitality support to provide an immediate emergency-cash injection for those businesses who, through no fault of their own, have seen their most valuable trading period annihilated,” UKHospitality Chief Executive Kate Nicholls said. “It will help to secure jobs and business viability in the short term, particularly among small businesses in the sector.”
Mike Cherry, national chairman of the Federation of Small Businesses, said the latest assistance “will help alleviate the intense pressures that small firms are currently under, and hopefully arrest a significant decline in confidence over this year.”
The FSB had been pushing hard for the sick-pay rebate. It said as many as one million people, or 1-in-30 workers, will be “sick or self-isolating by January,” adding significant cost to businesses.
Hospitality, leisure and events have been hit hard by what the Trades Union Congress has called a “lockdown by stealth.” It’s called for a “targeted” furlough job-support program and said workers had been “abandoned” as the new support was “not conditional on employers keeping workers on and covering their wages.”
The Treasury pointed has out that the latest help is in addition to existing measures and that businesses are sitting on more cash than they did at the start of the pandemic.
Cash balances for all hospitality businesses have risen by 7 billion pounds, and by 2 billion pounds for small and mediums-sized hospitality companies alone, it said. Businesses countered by saying balances may be inflated by year-end accounting conventions.
Existing support includes 1.5 billion pounds for previously unprotected companies in the supply chain, a reduction in VAT sales tax from 20% to 12.5% for hospitality and tourism companies until the end of March, a 75% reduction in business rates for the same period, and a rent moratorium.
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