Nearly 1 in 5 Hospitality Businesses at Severe Risk of Insolvency
Almost one in five hospitality businesses across the UK recently said they would consider themselves to be at severe risk of entering insolvency.
According to the Office for National Statistics (ONS), around 17 per cent of food and accommodation providers put themselves in that category, with 2020 having been an exceptionally tough year for the hospitality sector.
In addition to the high proportion of firms considering themselves to be at severe risk of insolvency, a further 21 per cent indicated they could be at moderate risk of being in that same situation.
Pubs, restaurants and other eateries have generally been hard hit financially by coronavirus restrictions throughout much of the year and the latest lockdown measures being introduced by the government could push some businesses into insolvency.
Indeed, the chief executive of the trade body UKHospitality, Kate Nicholls, warned recently that a new wave of Covid restrictions could represent a “death knell” for many businesses across the country.
However, the government has recently promised to provide financial support packages to hospitality companies affected by new restrictions, which have been welcomed and praised by Ms Nicholls and the hospitality sector.
Businesses obliged to close in areas of the country with Tier 2 restrictions in place have now been promised grants worth £2,100 per month by the chancellor, with the option available to backdate claims for grants where restrictions have already been in place for some time.
Meanwhile, companies will also be able to claim money from the government to partially cover the costs of paying their staff’s wages in the coming months if they remain open for business but on the basis of reduced hours.
“It is clear that even businesses that can stay open are facing profound uncertainty,” chancellor Rishi Sunak said on announcing a newly restructured coronavirus Job Support Scheme.
Ms Nicholls from UKHospitality said in a statement that the revised support scheme will “help to safeguard hundreds of thousands of jobs”.
“The grant support will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs,” she said.
“This gives businesses a much-enhanced chance of being able to overcome the challenges and survive into 2021.”