New COVID-19 restrictions set to 'wipe out' £7.8bn trade for hospitality firms

Tom Belger
·Finance and policy reporter
·3 min read

WATCH: Most of England placed in Tier 2 and 3 lockdown

New regional lockdown rules will cost more than 150,000 English venues an estimated £7.8bn ($10.4bn) in lost trade if they are in place throughout December, business chiefs have warned.

About 98% of England’s hospitality sector — from pubs, bars, restaurants and cafes to hotels and caterers — will fall under Tier 2 and 3 restrictions in December, analysis by the UKHospitality trade body suggests.

England’s lockdown is due to ease next week, but the UK government confirmed on Thursday that all of England bar Cornwall, the Isles of Scilly and Isle of Wight will remain on a ‘high alert’ or ‘very high alert’ status.

The new tier system is broadly stricter than the rules that were in place before England’s November lockdown. Tier 2 venues can only serve alcohol alongside substantial meals, and Tier 3 hospitality venues cannot open other than for takeaway services.

READ MORE: England’s regional tier restrictions announced by area

An estimated 16,000 pubs, 9,000 restaurants, 5,800 cafes, 4,500 hotels and guesthouses and 400 wine bars will be forced to close or only serve takeaway food and drink in Tier 3 areas, according to separate data from real estate advisory firm Altus Group. Some exemptions apply for accommodation for work or education purposes.

“The new tier system will deliver another huge blow to hospitality, with 98% of trade now happening in tier 2 or 3 regions,” said UKHospitality chief executive Kate Nicholls.

Bar stools up on tables in a closed pub in New Cross, south London, following the government ordered closure of bars, clubs and restaurants due to the Coronavirus outbreak.
Venues face a heavy hit from England's coronavirus rules, business chiefs warn. Photo: PA

“The new tiers will see over 120,000 venues across England placed into Tier 2, with tens of thousands of these forced to close as they are unable to provide a table meal, either physically or financially.”

She said 94% of its members had warned they would be unviable or trading at a loss under such severe curbs.

“For the 38,000 businesses in Tier 3, employing over 540,000 there is no option but to provide takeaway or close altogether,” she added.

READ MORE: Tax rises look ‘inevitable’ after dire UK economic forecasts

She said it was “unfair and arbitrary” that hospitality venues were being targeted, calling for greater evidence that hospitality was a “problem area” for infections.

Nicholls also called for “urgent further financial support” for the sector, warning the sector would otherwise be “fundamentally degraded” through huge numbers of closures and job losses.

“If we want to see businesses survive, then we desperately need a replacement for the job retention bonus scheme and for the government to extend the rent moratoria and broker a solution to tackle the issue of rent debt that has built up.”

READ MORE: UK pub group Fuller’s, Smith & Turner cuts one in five staff

The warnings were echoed by Mike Cherry, national chair of the Federation of Small Businesses (FSB). "These past nine months have been among some of the most difficult that small firms have ever had to endure and that hardship looks set to continue.

“Pubs and bars in particular will face a very difficult few weeks ahead and they will need targeted support to survive into the New Year.”

Meanwhile the UK government also faces pressure from political leaders in areas facing the strictest curbs.

Andy Burnham, Labour mayor of Greater Manchester, said the Tier 3 curbs in his area would mean “real hardship,” and criticised a lack of additional support for hospitality suppliers from security firms to cleaners.

WATCH: Why can't governments just print more money?