New lockdown measures begin this week in England and are being met with anguish in many industries. Businesses are being advised to operate remotely where possible and all non-essential shops must close. The move is hitting retailers and hospitality firms particularly hard. These sectors are warning the new lockdown measures are putting hundreds of thousands of jobs at risk. The timing is particularly bad as the two months leading up to Christmas are the most lucrative of the year. The new lockdown measures are affecting roughly 500,000 shops, restaurants and pubs.
Christmas gift spending is usually around £50bn in the weeks leading up to the festive period. However, shopper numbers are being predicted to fall 80% during the lockdown. This is causing retailers to fear mountains of unmovable stock. High street stores saw a weekly £1.6bn drop in sales during the first lockdown. The British Retail Consortium is an association of UK retailers. It reports the importance of the period means losses will affect thousands of shops and hundreds of thousands of staff. As such, there are fears the latest lockdown could be even worse this time.
GDP to fall once again
GDP fell a quarter between February and April due to the first lockdown. Predictions for an economic second wave are bleak, yet just how bad is not yet known. Sectors expected to be hit hardest during the new lockdown include retail, tourism and hospitality. These sectors make up around 15% of the overall UK economy. Any loses are therefore expected to significantly affect overall GDP.
The Institute for Fiscal Studies is a thinktank specialising in public finances. It estimates a £370bn shortfall in the government’s budget deficit following the new restrictions. It also highlights a loss of tax revenue and a likely doubling of furlough cases from September. An estimated 2-3 million people were on furlough in September.
Not all doom and gloom
However, others are claiming this second lockdown will not affect the economy as badly as the first. Paul Davis is chief UK economist at Capital Economics, an independent UK economic research consultancy. He claims our collective experience of the first lockdown will help this time around. He says, “People are more used to working from home and schools are going to stay open. Shutting schools took a lot off GDP both directly and indirectly. This is because parents had to take time off work to look after their children.” The UK economy remains around 5% smaller than before the pandemic. This also means the economy has less distance to fall, adds Davis. However, whether UK sectors seeing recovery following the first lockdown will do so this time is unknown.
Uncertainty a killer for small businesses
The timing of the new lockdown measures could not be worse. A good end to the year is often the difference between a profit or a loss for many working in hospitality and retail. There are growing fears that businesses which managed to survive the first lockdown will simply fold this time. Richard Lim is the chief executive of Retail Economics. He calls the new lockdown measure a “devastating blow for the industry”. He adds, “Small retailers remain in survival mode. Profits made during the festive period will determine whether they continue to trade into the new year.”
There is lots of uncertainty surrounding how low the new lockdown measures will be in place. This ‘not knowing’ is causing many businesses to give up rather than endure. The latest lockdown measures will end 2nd December. However, there are concerns the measures will last longer. Paul Johnson, director of the institute for Fiscal Studies, reflected this. He says, “I can’t say I am terribly confident we will be out of this by 2 December”.
947 people apply for 1 Waiter job
It seems like the beginning of a joke. However, the heart-breaking headline above appeared this week in the Guardian newspaper and Manchester media. A Peruvian-themed restaurant placed a job advert for a minimum-wage waiter. The vacancy was caused by the recent ‘eat out to help out’ scheme. The recruitment consultant who posted the jobs said she normally receives around 20 – 30 applications for such a role. Within four days she received 320 applications and 947 by the time the ad was taken down. A growing number of UK businesses are seeing a surge in job applications. Whilst a shocking indication of the current employment landscape, it had an even sadder ending. Whittled down to just two applicants, government restrictions meant the vacancy was withdrawn before either could be interviewed.
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