London bars and restaurants decide to close as omicron sweeps the UK
London (CNN Business) -- As the omicron variant of the novel coronavirus sweeps across the UK, pushing daily infections to their highest level on record, British businesses are closing their doors again, but not for no reason. government instructions.
Restaurants and other venues are deciding they have no choice but to close early for Christmas due to the spate of canceled reservations and concerns about the health of employees.
Ferhat Dirik, co-owner of Mangal 2 restaurant in east London, said he had decided to close a week earlier than planned due to lost bookings and "general uncertainty in the air".
"It's affecting staff morale, and it's affecting us in projecting any reasonable income that can justify this," Dirik told CNN Business.
The lockdowns are a new threat to the economy and a headache for the government, almost two years after the pandemic. They indicate that when cases are high enough, people are still willing to avoid going out, despite widespread pandemic fatigue. Although the government has not restricted social activity, England's Chief Medical Officer Chris Whitty has advised people not to meet with others unless absolutely necessary.
Unlike previous waves of covid, however, state support for businesses has waned, leaving the hospitality sector to fend for itself during a crucial period. Lobbying group UKHospitality estimates that its members make a quarter of their annual earnings at Christmas.
"In this December period, businesses are already reeling under the weight of debt taken on by the pandemic and facing rising costs across the board," Kate Nicholls, director of UKHospitality, said in a statement . "If traders can't trade profitably over the next month, many simply won't survive."
"Stealth" closure
UK Chancellor of the Exchequer Rishi Sunak on Thursday cut short a trip to the United States due to the deteriorating situation in his country.
"I understand the concern of companies at this time, given everything that is happening. That is why I have been in contact with the leaders of the hospitality sector, my team has organized round tables and talked with them," he said to CNN's Richard Quest. But Sunak offered no hint of support for the hospitality sector beyond existing measures, such as lowering sales taxes and taxes on local businesses.
"I think it's important to recognise, as the Prime Minister said today, that the situation is very different from what we've done and found before. The government isn't telling people to cancel things. It's not closing businesses." Sunak added.
The timing is making things worse for everyone. People who had planned to go out for dinner or drinks are giving up because they don't want to risk spending the holidays sick or in isolation, instead with their families.
According to OpenTable booking data, bookings in the UK plunged 24% on Tuesday and 22% on Wednesday compared to 2019. Globally, bookings were down 18% and 15%, respectively.
Staff working in the sector are also concerned about rising levels of infections among their colleagues.
"The main reason was the equipment. We didn't want anyone else to get sick," said Bash Redford, the co-owner of Forza Wine, in south London.
Redford said that as of Sunday night, two people on his team of 31 had come down with covid-19. By Wednesday morning, eight had contracted it, and Redford decided the risks to the rest of the squad needed to be limited. Forza Wine announced it would close from Wednesday until Christmas.
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Restaurants aren't the only ones facing a crisis. In a statement on Thursday, the London Theater Association warned of a "difficult situation" across the country.
"While ticket sales remain strong for the holiday period, show cancellations due to cast and crew illness, compounded by covid-related refund requests and audience changes, are creating an increasingly gloomier for locals over the next few crucial weeks," the union said.
The UK reported an all-time high of 88,376 coronavirus cases on Thursday. Public health authorities warn that cases of the delta variant "remain relatively stable in number," while those of the omicron "are increasing very rapidly." In London, it is already the dominant variant.
So far, Prime Minister Boris Johnson has avoided tougher restrictions, instead encouraging people to work from home where possible, mandating the use of face masks and requiring proof of vaccination or a test covid-19 refusal to enter clubs and major sporting events.
Johnson, whose party has just suffered a shock defeat in the midterm elections, said on Thursday that instead of "shutting things down" the UK government is asking people to "be prudent" and "think in their activities ahead of Christmas".
But it faces criticism from the hospitality industry, which sees such an approach as tantamount to imposing a "stealth lockdown", this time without financial support.
"It's another big blow to the industry by sending these mixed signals, telling people not to dine out, but not offering any guarantees to businesses," said Dirik of Mangal 2.
Another economic blow
Paul Donovan, chief economist at UBS Global Wealth Management, said this "voluntary collapse in entertainment and services" before Christmas could have a major effect on the economic recovery , which was already stagnating as inflation rose. UK gross domestic product only grew 0.1% in October, with output still 0.5% below its pre-pandemic level.
"There's no government help this time, so there's an impact," Donovan said.
A big near-term question is whether restaurants that decide to close early will still pay staff. If not, workers "will suffer a sudden decrease in income," Donovan said.
Mangal 2 continues to "look through the options" while weighing "what is morally right, as well as financially viable." Redford said Forza Wine staff will be paid this month, and that there is enough cash to ensure they will also be paid in January and February. However, after that, the outlook turns dark.
Ultimately, the magnitude of the economic hit will largely depend on how much time people spend spending at home rather than on activities like dining out, Donovan said. That will depend both on the measures the government takes and on the course of the virus.
The good news, he said, is that businesses have been through this before, and have processes for selling takeout and delivering meal kits. If they have to go down this path again, restaurants and bars will have lower costs to do so.
But for now, with coronavirus cases on the rise and another holiday season marred by the pandemic, the mood is bleak.
"People are very scared," says Redford, who planned to open two new locations in 2022. "Very, very scared."
-- Walé Azeez contributed reporting.
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