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Quarter of businesses think they will fail by end of year

Published:  24 September, 2020

Almost a quarter (23%) of hospitality businesses think their businesses will fail by the end of the year without further government support.

The stark figure forms part of new CGA research, released by UK Hospitality (UKH), the British Beer & Pub Association (BBPA) and the British Institute of Innkeeping (BBI), conducted prior to the latest restrictions announced by the PM earlier this week. 

The survey also found that one in eight hospitality staff have already been made redundant, and that more sector jobs are expected to be permanently lost when the government’s furlough scheme comes to an end in October. 

On average, businesses believe their workforce will be 25% lower by February 2021 compared to February this year – a decline of 675,000 jobs lost from the sector in a year. 

Only 7% of respondents said they were feeling optimistic about the prospects of the hospitality sector over the next 12 months, down from 23% in August and 19% in July when respondents were previously asked the same question. 

The trade body trio said the sector was “teetering on the edge”, and warned that the new restrictions, including a 10pm closure order and table service only, could result in 540,000 further jobs lost. 

On the back of the gloomy outlook for the industry, they have collectively called on the government to "take drastic action", urging it to immediately put in place a new sector-specific employment support package and to extend the VAT cut and business rates holiday for the sector.

These measures, said the trade bodies, would help pubs and hospitality businesses survive any further disruptions to their operations, enabling them to work towards a "safe and sustainable recovery heading into 2021 and beyond”.

“The future of the sector is still very much in the balance. Many venues have still have not reopened and those that have are operating at reduced capacity and a fraction of normal revenue. We have already had some high-profile casualties and far too many job losses,” said Kate Nicholls, CEO of UKH.

The additional restrictions announced this week placed even further burdens on a sector that was operating with “razor-thin margins and needs all the help it can get”, she added. 

“We need comprehensive financial support so that those businesses that survive the winter can begin to rebuild next year, starting with a package of measures to support short time working. The VAT cut for hospitality must be extended through 2021, as must the business rates holiday. We also need the government to step in now and help to deal with the rent debt that has built up over months of enforced lockdown.”

Nicholls also reiterated the importance of restrictions being reviewed regularly.

Following the government announcement earlier this week, UKH warned of the "hugely damaging" cumulative effect of the new restrictions.