Hospitality shares dive on Covid ‘cliff edge’ fears

SHARES in hospitality and travel tumbled as Boris Johnson delayed Freedom Day by a month – sparking warnings that firms faced a ‘cliff edge’ when Government support is cut.

In a move that plunged thousands of businesses deeper into crisis, the Prime Minister pushed back the date when all restrictions will lift from June 21 to July 19 after a sharp rise in cases of the Indian variant.

The delay will force 25,000 venues, many of which have not opened since March 2020, to remain shut and deal a £4bn blow to the UK economy.

Many that are able to open are still not making a profit because of social distancing and other measures to slow the spread of Covid.

Shares in pub groups, restaurant chains, hotels and airlines hit reverse.

Wagamama owner The Restaurant Group fell 4.3pc, Wetherspoon was down 4pc and Premier Inn owner Whitbread shed 1.8pc, while British Airways parent company IAG was 4.2pc lower and Easyjet sank 2.7pc.

Danni Hewson, an analyst at AJ Bell, said: ‘It’s just four weeks, but for some businesses it will be four weeks too many especially as there are no guarantees July 19 will bring an end to restrictions.’

Chancellor Rishi Sunak is now under pressure to extend Government support to compensate businesses for the losses and prevent another wave of insolvencies and job cuts. The extended lockdown will hit pubs, bars and restaurants in their peak season.

For many, the extra four weeks is particularly galling as it means they will be in place throughout the European Football Championships, which end on July 11.

Within days of the original June 21 date, businesses will be hit by a tsunami of costs. There is approximately £600m of rent due to commercial landlords from the hospitality sector on June 23.

A week later the ban on commercial rent evictions will lift, removing protections from tenants unable to pay during the pandemic. Landlords are owed up to £6bn. A £92m monthly business rates bill will then hit the hospitality sector on July 1 when relief falls from 100pc to 67pc.

And the Government will ask businesses to contribute 10pc of the costs for furloughed workers, ahead of the scheme’s end in September, even if they are still shut. The extra costs, while restrictions are in place, sparked an outcry from business leaders.

Dr Roger Barker, of the Institute of Directors, said: ‘We are now approaching a cliff edge, with Government support for business ending or beginning to taper off. It is vital this support is pushed out commensurately with the lockdown extension. Economic support and public health measures must be aligned.’

Kate Nicholls, chief executive at UK Hospitality, said: ‘Businesses need a swift, publicly-stated commitment that support will be in place.’ Emma McClarkin, chief executive of the British Beer & Pub Association, said: ‘Every week the current restrictions stay, the likelihood of pubs being lost forever increases.’

The Government is under pressure to extend the rent moratorium, or ring-fence debts built up. Many believe the business rates holiday should run until March.