The chancellor will trigger unemployment at levels worse than those seen in the early 1980’s if he does not announce continued and increased support for the businesses impacted throughout the pandemic in his budget next week.
The budget equation the chancellor needs to formulate has to be bridged by the equals sign pointing to the avoidance of a surge in business failures. In the short term, to elude people currently on furlough migrating to unemployment benefits, an unwanted added cost. In the medium to long term, to ensure the steady flow of future tax income.
So, to avoid mass unemployment heaping even more disruption onto the worst economic slump in over 300 years, businesses need to be supported in order to save and create millions of jobs.
Hospitality furlough
Hospitality has been camped squarely on the front line of impact from the coronavirus pandemic, and the scars of battle as a consequence sees more people furloughed than any other business sector in the UK.
There are currently 4.7 million people on the government’s furlough scheme, and 24.5% – 1,147,200 are hospitality people.
Hospitality reopening
The roadmap presented by the Prime Minister shows a phased and gradual return to reopening for hospitality. The release of employees from furlough for hospitality businesses will likewise need to be phased and gradual.
Hospitality sustaining growth
Not only will the chancellor need to avoid mass unemployment by supporting hospitality through an extended furlough scheme, but he will also need to inject cash flow to make up for the lack of revenues to meet fixed costs that remained throughout closure.
Hospitality businesses face the most difficult period in the pandemic in the weeks and months ahead with cash reserves close to exhaustion. This is apparent in all hospitality sectors and in businesses of all sizes. Mitchells & Butlers last week were forced to suspended payments into its pension fund and are now seeking £350 million in liquidity through emergency fundraising.
Hospitality tipping point
The viability of countless hospitality businesses, as a direct consequence of the pandemic, and only as a direct consequence of the pandemic, is close to a tipping point. If that tipping point is reached, a domino effect of business failures will see previous warnings of hospitality’s demise prove accurate.
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Hospitality & Catering News: hospitality’s pandemic tipping point. – 27 February 2021 – hospitality’s pandemic tipping point.
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