Business groups are increasing pressure on the government to assist firms suffering from the rise in Covid cases.
The CBI urged ministers to provide support “in lockstep with future restrictions”, while UK Hospitality called for business rates to be deferred and VAT discounts extended.
The spread of the Omicron variant has hit consumer confidence and seen hospitality bookings cancelled.
Labour urged further support for firms, but the government has so far declined.
However, the chancellor will meet with representatives from the hospitality sector on Thursday to discuss their concerns.
The UK government and devolved administrations have not placed any additional restrictions on businesses, such as lockdowns or reduced group sizes for restaurants or bars, but many firms have seen a collapse in customers at a time when they hope to recoup lost earnings.
On Wednesday, Prime Minister Boris Johnson advised people to “think carefully before you go” out to socialise. The UK’s chief medical officer Prof Chris Whitty also urged people not to “mix with people you don’t have to”.
The hospitality industry has estimated December takings will be down by 40% – with the damage up to twice that in London.
This has prompted UK Hospitality to ask for an extension of the discounted 12.5% VAT rate to stretch beyond its scheduled end in March 2022, and for business rates due in the first quarter of next year to be deferred.
Celebrity chef Tom Kerridge told the BBC one of his restaurants had 654 cancellations in the past six days, during a time of year for the industry which is trying to “claw our way back to some sort of normality”.
He said bar and restaurant owners “wouldn’t have a problem” if they had to close from a “government and scientific point of view” because of Covid, as long as financial support was put in place.
But, he added: “It feels like there’s a reactive approach to the situation rather than thinking of being proactive.
“If you’re telling people to work from home, which I get and I understand, there’s a knock-on effect on many businesses that are reliant on lunch trade… the coffee shop round the corner, the newsagent in the city, hairdressers and nail bars.
“There are so many different places that will be unable to cope. Getting shut down without financial support, a lot of places will close their doors and will not re-open in the new year.”
Patrick Dardis, chief executive of pub chain Youngs, said that widespread cancellations and no extra government support would mean hospitality closures in January.
“I think people are terribly confused and it’s certainly having a significant impact,” he told the BBC’s Today programme.
These Christmas weeks were critical for businesses “hanging on by their fingernails”, he added.
Youngs, which has 80% of its pubs in London, was helped by the reduction in VAT last lockdown and Mr Dardis called on the government to hold VAT for the hospitality sector at the reduced rate of 12.5% and lower business rates.
Sam Morgan, who owns restaurants Craft and 8, said his businesses had seen a “rapid decline” in bookings, with more than 600 cancellations.
“We’ve got a perfect storm,” he said. “Consumer confidence is low, meaning future bookings or bookings to replace current cancellations are low.
“Corporate customers are cancelling Christmas and New Year bookings due to nervousness around exposing customers to risk, and staff having members of their parties becoming ill, meaning they must isolate.”
Mr Morgan said the situation was “extremely worrying”, with revenue earned from the festive period used to cover less busy times in the first months of the year.
The CBI has called for an instruction from the government to tell councils to immediately release unused grants and rates relief to businesses in need.
Conservative MP Anne Marie Morris tweeted that if the government was “effectively telling people not to visit hospitality venues this Christmas”, then financial support should be provided.
Baroness Ruby McGregor-Smith, president of the British Chambers of Commerce, said businesses faced a “two-punch combination of serious issues with staff absence and plummeting consumer confidence”.
“Not even a rationale has been provided for why it believes no new support is required. They deserve better.
“Many of these firms, who have survived nearly two years of challenging trading conditions, are now seeing their vital festive income melt away in front of their eyes.”
Nick Farr, co-owner of Hertfordshire brewery Farr Brew, which owns six pubs, says it has been hit with around 450 cancellations in the past seven to 10 days and this has had a “devastating” impact.
“Yesterday one of our pubs – The Bull in Whitwell – we had a table of 15 booked, they were booked in for 12 o’clock, they literally cancelled at 9 o’clock. So that’s a lot of turkey going to waste, a lot of prep done undertaken by the chefs the night before. All of that money goes to waste really.”
He said if the government was asking people to limit socialising then they had to step in.
“Unless they are OK with literally dozens of thousands of pubs going under then they just simply have to put a very extensive package of financial aid back into place,” he told the BBC.
Rain Newton-Smith, CBI chief economist, said implementing Plan B measures was “the right thing to do”, but added it had “dented” demand and consumer confidence and further support for struggling firms would be needed in future measures were brought in.
‘Weather this storm’
“The Omicron variant is unlikely to be the final challenge the coronavirus poses the economy or the country. So, the question is: how do we learn to live confidently not just with the virus, but with its variants?”
Labour’s shadow chancellor Rachel Reeves and shadow business secretary Jonathan Reynolds have written to the chancellor and business secretary calling for urgent new support measures.
They said the government had not properly engaged with business leaders about how Omicron restrictions might affect them.
“It is time the government came forward with their plans to ensure our great British businesses and their workers have the clarity and support they need to weather this storm,” they said.
The Treasury said: “As we have done throughout the pandemic, we are closely monitoring the impact of the virus on the economy – and particularly the hospitality sector which is why the chancellor is meeting with representatives from the industry today.
“Our £400bn Covid-19 support package will continue to help businesses into spring next year and we will continue to respond proportionately to the changing path of the virus, as we have done since the start of the pandemic.”
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