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COVID-19 rules could see 290,000 UK job losses and cost the economy £7bn

Suban Abdulla
·3-min read
Hospitality sector employment could decrease by a third as beer sales slump by 15%, the industry said. Photo: Matthew Horwood via Getty
Hospitality sector employment could decrease by a third as beer sales slump by 15%, according to a study. Photo: Matthew Horwood via Getty

Britain’s economy is set to lose £7bn ($9bn) and a quarter of pubs are likely to close due to coronavirus restrictions, according to a study based on hospitality industry estimates.

Oxford Economics’ report said 11,750 bars will be shut, putting 290,000 jobs at risk, if COVID-19 curfew rules drag into next year.

The findings will add more pressure on the government as prime minister Boris Johnson faces fresh revolt from MPs over the 10pm curfews in the hospitality sector.

On Thursday, health secretary Matt Hancock defended the 10pm curfew imposed on pubs and restaurants. Hancock said, that the government was “seeking to strike a balance, allowing people to continue to socialise safely where that is possible while reducing the social contact that the virus thrives on.”

Hancock was urged by MPs across the board and councils in coronavirus hotpots to do more to help hospitality venues. Labour leader Sir Keir Starmer also urged the government to consider whether the 10pm curfew should remain in place.

Conservative party MP Philip Davies has accused the government of running a “nanny state.” He told the parliament that the curfew was doing untold damage to businesses and prompting “jobs to be lost, all just to see people congregating on the streets again.”

In response to Davies, Hancock said “hundreds of thousands of deaths that would follow is not price to pay” for Davies’s preferred option of “just letting it rip.”

READ MORE: Rishi Sunak admits unemployment will rise despite 'radical' job support scheme

Meanwhile, the study has found that 78% of pubs are operating at under three-quarter capacity, leading to calls from the industry for more support from the government.

While the report shows that hospitality sector employment could fall by a third as beer sales slump by 15% – leading to a £7bn cost for the economy, the real figures could be worse as calculations were carried out before the impact of the 10pm curfew could properly be factored in.

Chief executive of the British Beer and Pub Association, Emma McClarkin, told The Times: “It’s important to remember that outside of the current circumstances our sector is a thriving one and when this epidemic ends it will be key to driving the economic bounce back we will need. For that to happen though the government must invest in it now to ensure it’s still here to play that role.”

McClarkin has written to ministers to urge them to extend the March deadlines of the VAT cut, business rates holiday for the hospitality industry as well as cut in beer duty.

READ MORE: UK government fears Bounce Back loan losses could be £23bn

It comes as, chancellor Rishi Sunak, last week admitted unemployment will continue to rise, after he unveiled a package of new crisis measures designed to save firms and jobs.

The star of the show was a “job support scheme,” drawn up as a successor to the furlough scheme which has kept millions of workers employed — due to end in October.

Sunak set out a string of new policies in his “Winter Economy Plan”, which firms cautiously welcomed but warned did not go far enough to prevent lay-offs.

The finance minister also announced an extension of four coronavirus loan schemes for firms, VAT cuts for the hospitality sector, and more time for firms and individuals to pay taxes. Sunak also extended grants for the self-employed for six months, though only covering 20% of average monthly profits.

WATCH: What is the new job support scheme?