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November Downturn Highlights How Much Restaurants Mean to the U.K. Economy

Hospitality accounted for a third of the decline in GDP in November, with businesses forced to close their dining rooms

Climpson’s and Sons cafe on Broadway Market, open but preparing to close at the end of the day on the first day of coronavirus lockdown in London
Climpson’s and Sons cafe on Broadway Market in Hackney

The U.K.’s principal restaurant trade body has said that the closure of hospitality in November last year was responsible for over a third of the 2.6 percent decline in the British economy.

Figures published by the Office for National Statistics on Friday highlighted “the economic importance of the hospitality sector and reinforce calls for it to be supported and central to the Government’s reopening plans,” UK Hospitality said at the weekend. Hospitality accounted for just over one-third (0.9 percent) of the decline, the figures showed.

Chancellor Rishi Sunak, said “it’s clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face.”

The trade body’s chief executive Kate Nicholls said the figures were “pretty depressing if not surprising.”

“This really hammers home how important [hospitality] is to the economy,” Nicholls observed. “When we were open, albeit with restrictions, in the summer, our return to growth contributed to the economy growing. The figures highlight our power as an economic driver and show why we should be at the heart of plans to revitalise the economy.”

It is clear that the Treasury also shares this view, and despite the closures imposed by the government on the sector, the over £500 million investment in the ‘Eat Out to Help Out’ restaurant discount scheme in August last year demonstrated how important policymakers regard the recovery of hospitality to the overall economic recovery of the country.

Nicholls urged the government to again prioritise hospitality once the government has executed its vaccine roll-out. “We need to be supported properly if we are expected to power economic growth and spearhead the country’s revival,” she said. “The level of support has to reflect the hit that the sector has taken and ensure those hardest hit receive the proper help they need.”

Until then, restaurants must either muddle or innovate their way through the coming months if they are to survive until the spring — the point at which most hope to be in a position to operate after restrictions are lifted across the capital.

It is either that or they wait. Business owners still do not know if legislation protecting restaurants from eviction will still expire at the end of March; nor do employees know if the government’s wage support scheme will be extended beyond the same date; or if those in charge will sanction an extension to the cut in VAT and the business rates holiday, both of which are also due to expire at the end of March. Restaurants across the city and across the board have been calling for an extension, which equals significant cost-saving, for both.

Before that, there is faint hope that the government gives restaurants a date to work towards when it undertakes its first formal review of the current national lockdown measures on Wednesday 20 January.

Until then, everyone must wait.