UK economy shrank by 20,4% after covid hit the country and shops, factories and construction sites had to shut down. This third lockdown has hit hard businesses that were already weakened by the other covid restrictions.
More UK businesses at risk
UK’s third lockdown could be the final straw for thousands of businesses already weakened by the first and then second lockdowns. About 10,000 pubs had to shut down permanently in 2020 and it is estimated more than 250,000 small firms are not set to improve their conditions. Restaurants and hospitality venues are still paying thousands of pounds weekly although being shut and having zero income. One lobby groups has estimated about 250,000 firms are at risk of going bust.
The treasury has already given support for businesses, spending about £300bn on workers and businesses through the pandemic. Unfortunately, although firms have been given support they have generally required companies to go on debt to survive, despite the Government support. Mike Cherry from the National Chair of the Federation of Small Businesses said: “It’s been a grim year. Many have now found themselves on the brink of collapse, and these exceptionally hard times are set to continue.”
UK businesses mostly hit were retail and hospitality, which employ the 17% of UK workforce. The current situation is not set to improve soon. It is estimated more than three quarters of firms are servicing a loan and 40% of these have defined their condition as ‘unmanageable’. ”If businesses have no means of generating revenue and they have no savings left, there is nowhere for them to go,” said Kate Nicholls, CEO of UK Hospitality. According to Nicholls, businesses are in debt and it will be piling up in the next weeks as bills continue to go out. “The result is going to be more business failures and even more jobs lost.”
READ MORE:
- Here are all the businesses closed for Covid so far
- Rishi Sunak announces economic plan for third lockdown