The UK’s economic recovery accelerated in May as tourism and entertainment firms reopened, but delays in easing Covid-19 restrictions are putting hospitality firms at risk, research shows.
According to the Lloyds Bank UK recovery tracker, eleven of the UK’s 14 regions reported a sharp increase in production month to month in May, up from nine in April, as the UK moved further out of lockdown.
The tracker found that the UK tourism and entertainment sector posted the fastest growth in production growth as British hotels, pubs and restaurants benefited from increased consumer demand.
Firms took on more employees to handle the increasing demand. All 14 sectors reported a growth in jobs led by manufacturing in May, while the tourism and entertainment sectors added jobs for the first time since January 2020.
Jevan Lolle, head of economics and market insights for commercial banking at Lloyds Bank, said sectors hit by coronavirus restrictions are now trailing those that operate more freely during the lockdown.
“Whether the four-week delay in further easing of restrictions will affect this trend is not clear. But while the delay is downright frustrating for many businesses, there is no denying that the economy is in a very strong position now,” Lolle said.
The survey also showed that companies in the economy raised their prices in May, led by chemicals and metals and mining producers.
“While UK inflation rose higher than expected in May and strong demand led more businesses to pass on rising costs to their customers, it is still too soon to worry about inflation spiraling out of control,” Lolle said.
Fast-food chain McDonald’s on Sunday announced expansion plans and will recruit 20,000 employees over the next 12 months as it opens 50 new restaurants in the UK and Ireland.
But the Covid-19 restrictions are hurting the hospitality sector, especially the night time economy.
About 25,000 licensed premises were still closed at the end of May 2021, according to research by CGA and AlixPartners, which warned that delays in ending the lockdown put thousands more clubs, restaurants, pubs and bars at risk.
CGA and AlixPartners found that more than three-quarters of UK licensed sites were doing business as of the end of last month, up from about a third in April, thanks to the return of internal service.
While more than nine out of 10 food pubs, high street pubs and casual dining restaurants are open, sectors that rely on late-night business are still at risk of failure, the report found.
“Many operators have reopened in anticipation of the lifting of restrictions on June 21, and have accepted the potential forecast and suppressed business for the period up to that point,” said AlixPartners managing director Graeme Smith.
“Far far from ideal, knowing that ‘Independence Day’ was on the horizon meant operators could fight through this challenging time, perhaps welcoming team members in anticipation of getting back to business and speeding up operations. Another four-week delay is a devastating blow, creating significant uncertainty and further financial stress.”
Night Time Industries Association chief executive Michael Kiel has urged the government to lift the ban on July 5 – the two-week review point when the restrictions were extended. He said the industry was “on the verge of breaking”.