U.K. Chancellor of the Exchequer Rishi Sunak on Tuesday unveiled a fresh £4.6 billion ($6.2 billion) support package for struggling U.K. businesses, just hours after the government imposed a third lockdown in the country to curb a rapid rise in coronavirus cases.
Businesses in the retail, hospitality and leisure sectors will be able to claim up to £9,000 ($12,235) in one-off grants to help them cope with the latest restrictions, which were announced late on Monday night by Prime Minister Boris Johnson.
Under the new lockdown, all hospitality venues and nonessential shops must remain closed until at least mid February, heaping more pressure on those already-struggling sectors.
The new lockdown grants are expected to benefit more than 600,000 business properties across the U.K., and will be worth around £4 billion, the treasury said. A further £594 million will be made available to local authorities and devolved administrations to support businesses not eligible for the grants.
“The new strain of the virus presents us all with a huge challenge — and whilst the vaccine is being rolled out, we have needed to tighten restrictions further,” Sunak said in a statement. “This [support package] will help businesses to get through the months ahead — and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen,” he added.
The new one-off grants come in addition to billions of existing business support, including grants worth up to £3,000 for closed businesses, and up to £2,100 a month for impacted businesses once they reopen.
Sunak said in November that government support measures to that date to help businesses cope with the COVID-19 pandemic would cost about £280 billion this financial year.
News of the cash injection lifted shares in pub groups Marston’s
and Mitchells & Butlers
which rose 2.39% and 2.43% respectively in London trading on Tuesday morning. Restaurant Group
which operates 350 restaurants and pubs across the U.K. including the Frankie & Benny’s and Wagamama chains, saw its stock rise 3.69%.
Business leaders welcomed the support package, but warned that on its own, the support wasn’t enough to keep businesses afloat longer term.
“This is only a sticking plaster for immediate ills”
“While this announcement is most welcome, make no mistake that this is only a sticking plaster for immediate ills — it is not enough to even cover the costs of many businesses and certainly will not underpin longer-term business viability for our sector,” said Kate Nicholls, chief executive of trade body UKHospitality.
“To address the inevitable and existential challenges that hospitality faces, we need confirmation of extensions to the business rates holiday and of the 5% VAT [value-added tax] rate,” she added.
The U.K.’s hospitality sector suffered lost sales of more than £53 billion ($72 billion) in 2020 due to the impact of coronavirus restrictions on trade, according to a data report by CGA and UKHospitality published in December.
Adam Marshall, director of the British Chambers of Commerce, said on Twitter
that ministers need to set out a clear support package for the whole of 2021 — not just until spring — “to help businesses of all shapes and sizes survive this difficult and uncertain year.”
Roger Barker, director of policy and corporate governance at the Institute of Directors, said the new cash injection would “go some way to reassuring the worst affected businesses,” but warned that the chancellor “must remain wary of a spring cliff-edge in business support as the furlough program and other support measures unwind.”