Shares in pub and restaurant companies slumped lower after it was confirmed that London will move into the new tier-2 of the local lockdown system on Saturday.
Residents of the capital will not be allowed to meet people from other households indoors in either private or public settings, while groups of six from different households can meet outdoors.
Mayor Sadiq Khan asked Boris Johnson for further financial support for businesses and vulnerable people being hit by the measures.
Urgent action is needed to protect Londoners & bring the virus under control in our city. The Govt must provide proper financial help to all businesses & vulnerable Londoners affected by further restrictions, as well as local authorities who support them. My letter to the PM: pic.twitter.com/hpB9GMSTxi
— Mayor of London (gov.uk/coronavirus) (@MayorofLondon) October 15, 2020
Kate Nicholls, the chief executive of UKHospitality, told Khan 250,000 jobs are on the line following the new restrictions in London.
Financial support is available to businesses in a tier 3 lockdown but not tier 2 and Nicholls called for the removal of hospitality employer contributions from the Job Support Scheme or else apply “tier 3 job support to tier 2 businesses”.
Without that, “We are looking at catastrophic businesses closures and widespread job losses in the capital as early as 1 November,” Nicholls said.
“London entering Tier 2 will further kybosh the recovery of the economy, just as many businesses were starting to find their stride,” added small business owner Mark Williams, chief executive of London-based IT company Pensar.
“Add the capital to the even stricter lockdowns that look set to be introduced in the north and it’s clear the UK economy is now entering a whole new level of crisis mode… If there’s one positive in all this, it’s that many businesses are now very well set up for effective homeworking, but for those that are dependent on footfall, it’s another devastating blow.”
New restrictions are being applied to Essex as well as London. Lancashire remains in tier 2 though it is not clear whether Greater Manchester will be moved into tier 3.
The publican blamed the government restrictions for this, commenting they were “hugely disappointing in view of a lack of clear evidence tying pubs to the recent increase in infection levels”.
The planned job cuts follow similar actions from fellow pub group Mitchells & Butlers PLC (LON:MAB) that on Tuesday said it has started consultations to cut staff but it has not yet disclosed how many jobs will go.
Other pub company shares were hit on Thursday, including Fuller, Smith & Turner (LON:FSTA) and Youngs (LON:YNGA), while online takeaway food group Just Eat Takeaway (LON:JET) and online grocery group Ocado (LON:OCDO) were both higher.
British Beer & Pubs Association on Tier 2 restrictions: “Tier two restrictions will decimate pubs, brewers and their supply chains in these regions unless a proper package of support is given to them.”
Tier 2 absolutely the worst option. Tier 3 means they get financial support.
— Rob Davies (@ByRobDavies) October 15, 2020
–Adds UKHospitality statement–