Hospitality and travel firms ‘on a cliff edge’: Shares dive as Freedom Day is delayed by a month following sharp rise in Indian variant cases
Shares in hospitality and travel tumbled as Boris Johnson delayed Freedom Day by a month – sparking warnings that firms faced a ‘cliff edge’ when Government support is cut.
In a move that plunged thousands of businesses deeper into crisis, the Prime Minister pushed back the date when all restrictions will lift from June 21 to July 19 after a sharp rise in cases of the Indian variant.
The delay will force 25,000 venues, many of which have not opened since March 2020, to remain shut and deal a £4billion blow to the UK economy.
Delay: In a move that plunged thousands of businesses deeper into crisis, Prime Minister Boris Johnson (pictured) pushed back the date when all restrictions will lift from June 21 to July 19
Many that are able to open are still not making a profit because of social distancing and other measures to slow the spread of Covid.
Shares in pub groups, restaurant chains, hotels and airlines hit reverse.
Wagamama owner The Restaurant Group fell 4.3 per cent, Wetherspoon was down 4 per cent and Premier Inn owner Whitbread shed 1.8 per cent, while British Airways parent company IAG was 4.2 per cent lower and Easyjet sank 2.7 per cent.
Danni Hewson, an analyst at AJ Bell, said: ‘It’s just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees July 19 will bring an end to restrictions.’
Chancellor Rishi Sunak is now under pressure to extend Government support to compensate businesses for the losses and prevent another wave of insolvencies and job cuts. The extended lockdown will hit pubs, bars and restaurants in their peak season.
For many, the extra four weeks is particularly galling as it means they will be in place throughout the European Football Championships, which end on July 11.
Within days of the original June 21 date, businesses will be hit by a tsunami of costs. There is approximately £600million of rent due to commercial landlords from the hospitality sector on June 23.
A week later the ban on commercial rent evictions will lift, removing protections from tenants unable to pay during the pandemic. Landlords are owed up to £6billion.
A £92million monthly business rates bill will then hit the hospitality sector on July 1 when relief falls from 100 per cent to 67 per cent.
And the Government will ask businesses to contribute 10 per cent of the costs for furloughed workers, ahead of the scheme’s end in September, even if they are still shut. The extra costs, while restrictions are in place, sparked an outcry from business leaders.
Dr Roger Barker, of the Institute of Directors, said: ‘We are now approaching a cliff edge, with Government support for business ending or beginning to taper off.
‘It is vital this support is pushed out commensurately with the lockdown extension. Economic support and public health measures must be aligned.’
Kate Nicholls, chief executive at UK Hospitality, said: ‘Businesses need a swift, publicly-stated commitment that support will be in place.’
Emma McClarkin, chief executive of the British Beer & Pub Association, said: ‘Every week the current restrictions stay, the likelihood of pubs being lost forever increases.’
The Government is under pressure to extend the rent moratorium, or ring-fence debts built up. Many believe the business rates holiday should run until March.