Hospitality sector 'worst hit' by recession

Tanwen Dawn-Hiscox

Tanwen Dawn-Hiscox

Deputy Editor

Losses in the restaurant industry as a result of the pandemic have disproportionately impacted the UK's overall economic downturn, according to the Office for national statistics (ONS).

Few were surprised when the news hit this morning that the UK is in the midst of the largest recession since records began in 1955, as the current crisis saw the economy contract by 20.4% between April and June.

After the government took longer than other nations to implement lockdown controls, ergo also relaxing them at a slower pace, the ONS said the UK had plunged into the deepest decline of any G7 nation in the second quarter - slower than France, Germany, Italy and the US.

But as industry body UK Hospitality figures show that the sector is one of the UK's largest employers, typically generating over £150bn of direct and indirect revenue every year, it is unsurprising that the knock-on effect of the coronavirus reflects the extent of the casualties in the sector.

In an attempt to reassure, Chancellor of the Exchequer Rishi Sunak said: I’ve said before that hard times were ahead and today’s figures confirm that hard times are here. Hundreds of thousands of people have already lost their jobs and, sadly, in the coming months many more will. But while there are difficult choices to be made ahead, we will get through this and I can assure people that nobody will be left without hope or opportunity.”

There is reason to hope that hospitality businesses will return to trading successfully, partly thanks to the Eat Out to Help Out scheme and the recent bout of good weather, and that government support (VAT cuts, the furlough scheme) will ensure that most operators keep their head above water.

Defying economists expectations, Britain's GDP grew by 8.7% in June as lockdown measures were gradually lifted, and pent-up demand triggered a rise in consumer spending.

But with the end of the furlough scheme set at the end of October, a potential second wave and almost certainly more local lockdowns on the horizon, as well as the unresolved matter of rents, further losses in the sector are likely.

Last month, UK Hospitality warned that 320,000 jobs were at risk unless businesses were offered help to recover from the coronavirus. 

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Tanwen Dawn-Hiscox

Tanwen Dawn-Hiscox

Deputy Editor 12th August 2020

Hospitality sector 'worst hit' by recession