The British Chancellor Rishi Sunak is weighing a second bailout for the hospitality industry following new restrictions last week and a change of guidance.
Chris Whitty, the Chief Medical Adviser to the UK government, asked the public last week to scale back their Christmas plans while Boris Johnson, the Prime Minister, said “we’re not cancelling people’s parties or their ability to mix, but think carefully before you go.”
Bookings have dropped 50% since, creating a new crisis in the hospitality industry that has barely recovered from two years of on and off lockdowns.
Kate Nicholls, head of UKHospitality, said that as many as 10,000 sites could close if support is not announced.
“We don’t have another week, the industry is hanging on by its fingernails,” she said.
The chancellor is thought to be considering a fresh emergency VAT cut for the hospitality and tourism industry and additional cash boosts for businesses.
Last week he said local authorities have a quarter of a billion in cash to support businesses, while business rates have been cut by 75%.
In addition there are emergency loan schemes still running for hospitality, but in light of the new pingdemic creating labour shortages as people are asked to isolate, straight up cash boosters may be coming.
That’s while inflation crosses 5% with more supply chain disruptions expected as China locks down a manufacturing region and Netherland closes down.
A rebellion is growing in the United Kingdom following the shock resignation of a close confidant of Boris Johnson, Lord Frost. He said:
“I left the government, as I think is well known, because I couldn’t support certain policies, most recently on COVID restrictions and ‘plan B’.”
There are talks of ‘plots’ as a Johnson loyalist, Nadine Dorries, was kicked out from a WhatsApp group of conservative MPs that are dissatisfied with the lockdown-first approach to the pandemic.
While in Germany the new finance minister, Christian Lindner, says he is very worried about inflation which is set to get worse as another round of cancelling non-activity through printed money out of nothing, is potentially again on the table.
That makes Sunak’s job for the next few hours and days, arguably the hardest in the world. He has to balance the expectations of inflation and the consequences of more borrowing/printing in financial and speculation markets, with softening the blow to the economy that Johnson’s new restrictions keep creating.
He has to make Labour look like stealth socialists in suited boots, while shielding himself from looking like Mr Scrooge. He also has to be seen to not encourage further restrictions, while indeed saving these pubs if that’s necessary, while at the same time not have markets shout at him.
The two latter parts in particular are maybe a bit difficult because inflation is already high and more ‘free’ money can only mean it will get higher.