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UK businesses facing ‘perfect summer storm’ without support

A combination of looming deadline for the end of financial support mean UK businesses could be in trouble if Covid restrictions are extended.

Businesses across the UK are facing a “perfect summer storm” without plans to continue current levels of economic support if the roadmap out of lockdown is extended on Monday, Labour has warned.

Shadow Business Secretary Ed Miliband said that businesses have operated under “historic uncertainty” throughout the pandemic, only worsened by lack of clarity. 

“Now once again, businesses are in the dark, with a perfect storm of financial pinch points brewing and no reassurance from government that economic measures will remain in step with possible changes to the roadmap,” he said.

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Restrictions on businesses such as night clubs and music venues are currently due to end on June 21. The government may push the opening date back by a number of weeks, however, due to an increase in infections and hospitalisations caused by the spread of the coronavirus Delta variant, first identified in India.

Quarterly rent on commercial properties is due on June 23 and from July 1 businesses will no longer be safeguarded from commercial evictions, placing further pressure on both hospitality and high street retailers.

It is estimated that £6bn is owed to commercial landlords throughout the country, and that two-thirds of retailers are at risk of being evicted from at least one of their stores.

The hospitality industry is facing the biggest threat if further restrictions are extended, with 12,000 premises having already faced closure since the pandemic began. 

“We’ve got to back businesses on our high streets and safeguard the recovery of local economies,” Miliband added. “Businesses should not have to worry for even one day that economic support will be pulled away whilst restrictions remain in place.” .

Kate Nicholls, chief executive of industry body UKHospitality, said that if the government chooses to delay social distancing restrictions it will cost around “£3 billion per month” for the sector.

 “It would mean pubs, restaurants and hotels are still operating in unviable conditions and unable to turn a profit,” she said.

“It is simply unsustainable for the sector to continue to operate under these conditions for the long term, and it would significantly undermine businesses, jobs growth and the economic recovery.

Further financial support from the government “is vital” if restrictions are extended, she added,  “including business rates payments being postponed until at least October.”

 As it stands, the  July 1 date will see business rates relief drop from 100 per cent to 67 per cent and employers must start contributing 10 percent towards furlough. 

Ms Nicholls said that UK businesses need a “swift publicly stated commitment” that support will be in place in the event of a delay.