The UK’s economic recovery accelerated in May when tourism and leisure businesses reopened, but the delay in ending Covid-19 restrictions puts hospitality businesses at risk, research shows.
Eleven out of 14 UK sectors saw faster production growth in May compared to the previous month, up from nine in April when the UK moved further out of lockdown, according to Lloyds Bank’s UK Recovery Tracker.
The tracker found that the UK’s tourism and leisure sector saw the largest increase in production growth as UK hotels, pubs and restaurants benefited from pent-up consumer demand.
Companies hired more staff to meet increasing demand. All 14 sectors saw employment growth in May, led by manufacturing, while the tourism and recreation sectors added new jobs for the first time since January 2020.
Jeavon Lolay, director of economics and market insights for commercial banking at Lloyds Bank, said sectors acutely affected by coronavirus restrictions now outperformed those that operated more freely during the lockdown.
“It is unclear whether the four-week delay in further easing restrictions will affect this trend. But while the delay is understandably disappointing for many companies, there is no denying that the economy is now on much more solid footing, ”Lolay said.
The survey also showed that companies across the economy raised their prices in May, led by chemical and metals manufacturers as well as mining producers.
“While UK inflation rose higher than expected in May and increased demand caused more companies to pass rising costs on to their customers, it is arguably too early to worry about inflation spiraling out of control,” said Lolay.
The McDonald’s fast food chain announced expansion plans on Sunday and will hire 20,000 workers over the next 12 months as 50 new restaurants open in the UK and Ireland.
But the Covid-19 restrictions continue to harm the hospitality industry, especially the night economy.
According to research by the CGA and AlixPartners, around 25,000 licensed premises were still closed at the end of May 2021, warning that thousands more clubs, restaurants, pubs and bars are at risk the delay before the lockdown ends.
CGA and AlixPartners found that more than three-quarters of UK licensed sites were trading late last month, up from about a third in April, thanks to the return of Insider Service.
However, while more than nine out of ten food pubs, high street pubs, and casual dining restaurants are open, sectors that rely on late-night trading are still at risk of failure, the report said.
“In anticipation of the removal of the restrictions on May 21, many operators will
“Though far from ideal, knowing that ‘Freedom Day’ was on the horizon meant that operators could get through this challenging period, possibly get team members back to business in anticipation, and bring operations up to speed. Another four-week delay is a devastating blow that leads to considerable uncertainty and further financial burdens. “
Michael Kill, the executive director of the Night Time Industries Association, has called on the government to lift the restrictions on July 5th – the two-week review date set for the extension of the restrictions. He said the industry was “on the verge of collapse”.