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Over three-quarters of hospitality businesses at risk of insolvency

Published:  04 August, 2020

More than three-quarters of hospitality businesses in the UK are at risk of insolvency within 12 months, according to a new survey by UK Hospitality.

The survey, carried out in partnership with CGA, showed that one-in-five are at significant risk of insolvency, or expect insolvency, within a year, with over half of businesses believing there is a slight risk, while fewer than one-quarter of hospitality businesses are facing no risk.

UK Hospitality is warning that unless further decisive support is provided by the government, many businesses will face ruin, with hundreds of thousands of jobs at risk.

“These new figures underline the scale of the impact of Covid-19 on our sector and paint a truly stark picture of its immediate future,” said Kate Nicholls, chief executive of UK Hospitality.   

“Over three-quarters of businesses in a sector which, pre-Covid, employed more than three million people, have some risk of insolvency within a year. Worryingly, over 20% are looking at a serious risk of insolvency or are now expecting it to happen. This is a truly desperate position to be in.”

The future of the sector had “never looked shakier”, she added. 

“The support the government has provided has been crucial in ensuring that many businesses have survived the initial shock of lockdown and stimulated a return of some demand. Without further support, however, we are going to see more and more venues going out of business and people continue to lose jobs,” she said.

“This means we need to see an extension of the business rates holiday and VAT cut, employment support for those businesses unable to open and financial support on rent. Otherwise, we are going to see businesses fail and jobs lost just as the economy begins to reopen.”