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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

Omicron and Covid plan B makes December UK rate rise less likely; US jobless claims lowest since 1969 – as it happened

Commuters make their way across London Bridge towards the city of London during the morning rush hour today.
Commuters make their way across London Bridge towards the city of London during the morning rush hour today. Photograph: Chris J Ratcliffe/Getty Images

Closing summary

That’s all for today. Here are today’s main stories:

Uncertainty over Omicron, and the introduction of new restrictions in England, mean the Bank of England is less likely to raise interest rates next week, some experts say.

The number of Americans filing new claims for unemployment support has hit the lower level in over 50 years.

Just 184,000 ‘initial claims’ for jobless benefit were filed last week, on a seasonally adjusted basis, a drop of 43,000.

The hospitality industry is calling for more taxpayer support, as the rollout of Plan B restrictions and home working threatens to ruin Christmas trading.

Rating agency Fitch has ruled that China Evergrande’s overseas bonds are in default after the world’s most indebted developer failed to make a crucial interest payment this week.

The number of people dining out across the UK has dropped to the lowest level since the reopening of indoor hospitality in May.

The City regulator has refused to intervene in a deal to sell the mutual LV= to a US private equity firm, despite an 11th-hour plea by lawyers to try to delay Friday’s vote by members of the mutual to approve the controversial takeover.

The law firm Leigh Day, which is working on behalf of two LV= members leading objections to the takeover, met with officials from the Financial Conduct Authority on Thursday in an attempt to put the brakes on a £530m deal that would end the firm’s member-owned status and put it in the hands of Bain Capital.

The lawyers have been urging the FCA to withdraw a statement from October in which the regulator said it would not object to either the takeover or plans to demutualise LV=. They have raised concerns about how the mutual’s leadership disseminated information about bids from Bain and rivals, including fellow mutual Royal London, as well as a lack of member consultation.

Leigh Day said on Thursday that while the meeting with the City regulator was helpful, “regrettably the FCA declined to withdraw their ‘non-objection letter’ before tomorrow’s vote”.

Markets close

In the City, the FTSE 100 index has ended 16 points lower at 7321, down 0.2%.

Engineering group Rolls-Royce was the top faller, down 3.4%, despite reporting that it was no longer burning cash after making deep cost cuts in response to the coronavirus pandemic

Airline operator IAG (-3.3%), and gambling group Entain (-2%) were also high in the fallers.

Most European markets finished lower too, with Germany’s DAX off 0.3% and France’s CAC losing 0.1%.

Danni Hewson, AJ Bell financial analyst, sums up the day:

“The thing about a glass half full is that it’s also half empty. After days of optimism-fuelled gains investors seem to have grown slightly weary of thinking positively and markets have slumped. There is certainly enough uncertainty around to trouble even those wedded to their rose-tinted specs. Evergrande’s teeter over the edge seems to have ended with the fall we all saw coming. With China’s government having done a pretty good job of assuring global investors that blowback should be limited markets have remained relatively untroubled. Then there’s tomorrows US inflation data hurtling towards us like a souped-up freight train. Even with Omicron in the mix any number over expectation will trouble central bankers.

“In London Rolls Royce was one of the days big losers despite achieving quicker than expected cost savings as the travel sector finds itself back in the blender and any expansion plans will undoubtedly be shoved back in a drawer. By contrast trading updates from Frasers group, Moonpig and packaging company DS Smith were warmly received, all can function if restrictions are increased and indeed the latter should seriously benefit if this Christmas becomes “Clickmas” once again.

Updated

Most workers support vaccine and mask mandates for the workplace, a new global survey has found.

A poll of almost 14,500 employed adults in 33 countries, conducted by the World Economic Forum and Ipsos, found that about three in four agreed that everyone in their workplace should be fully vaccinated (78%), undergo frequent testing if unvaccinated (74%), and wear a mask in common areas (81%).

A majority of workers in most countries (averaging 62% globally) would not feel comfortable going to work if such measures were not in place, according to the poll.

It was conducted between 22 October and 5 November 2021 – a few weeks before the emergence of the Omicron variant.

It’s the end of an era for one of the UK’s oldest investment trusts.

Shareholders in Scottish Investment Trust today gave their approval for plans to merge with JP Morgan Global Growth & Income, following a long run of relative underperformance.

Today’s vote means that JP Morgan Funds will take over as investment manager and position the portfolio in line with the JP Morgan Global Growth & Income portfolio, removing one of the few remaining self-managed trusts from the sector.

The two trusts will be formally combined in the future, once Scottish Investment Trust can put itself into liquidation in an orderly fashion.

Incorporated in Edinburgh back in 1887, Scottish Investment Trust began by investing in the Americas, buying stakes in railroads in the US, Latin America and Cuba, as well as an Argentinian bank, Costa Rican bonds, a Uruguayan chemical company and the Brazilian Submarine Telegraph Company.

Early investors ranged from professional types such as lawyers, doctors and church ministers, to “ordinary working people” including a baker, a grocer, a house painter, a school mistress and a butler.

Coincidentally, JPMorgan Global Growth and Income can also trace its history back to 1887, when The British Steamship Investment Trust Company was created. It was later renamed as Fleming Overseas, which JP Morgan Chase took over in 2000.

Kyle Caldwell, Collectives Specialist at interactive investor, says there is a sense of poignancy and sadness about the decision:

“Self-directed retail investors are becoming more and more influential on investment trust shareholder registers. In order to attract and retain these investors, pedestrian performance is becoming much harder for boards to tolerate. After all, boards want an investment trust’s assets to grow and have scale. If performance does not keep investors sweet – they are free to leave at any time.

“Given this backdrop I am not surprised to see shareholders approve the merger of Scottish Investment Trust and JPMorgan Global Growth & Income. It has been a prolonged period of underperformance for Scottish’s shareholders. Its ‘ugly duckling’ strategy of buying out-of-favour shares has not paid off over short and long time periods.

“While the merger was not unexpected, and probably the right outcome, it is a sad end of an era. This is a trust with a strong retail shareholder base, which has been handed down through generations. In largely retail owned investment trusts, like Scottish, retail investors have a better chance of making their voices heard.

President Joe Biden has welcomed the drop in jobless claims to a 52-year low, and flagged that tomorrow’s US inflation reading could remain high (it reached a 30-year high of 6.2% in October)

E-scooters to be banned from TfL network over battery fire risk

An e-scooter scootering through Cambridge Circus, Soho, London.
An e-scooter scootering through Cambridge Circus, Soho, London. Photograph: Jill Mead/The Guardian

E-scooters will be banned from the public transport network in London from Monday for safety reasons after a spate of battery fires.

The ban will apply to privately owned e-scooters and e-unicycles even when folded or carried, after a number of incidents when the electric vehicles have combusted.

Transport for London and fire services said such incidents, when defective lithium-ion batteries ruptured and caught fire, could lead to significant harm to life and premises, not least with toxic smoke being emitted, potentially in confined spaces.

TfL said customers with privately owned e-scooters would not be permitted to enter any premises on its network, or travel on any of its services, including the tube, buses or trams.

Privately owned e-scooters remain illegal for use on all UK public roads but many hundreds of thousands have been sold.

Despite the rise in uncertainty around the Omicron variant, Deutsche Bank’s chief UK economist Sanjay Raja thinks the Bank of England will still raise interest rates next week, to 0.25%.

But it’s a close call, he writes:

Why are we sticking to our call? Fundamentally, news of the Omicron variant has changed little on the medium-term economic outlook. The labour market remains as tight as it has been in recent memory, in spite of the furlough scheme ending on 30 September. And inflation continues to outpace staff forecasts, despite a sizeable upward revision in the November Monetary Policy Report.

Moreover, the potential disruption from Omicron may lead to even more inflationary pressures in the medium term, with supply chain bottlenecks and labour shortages/mismatches further exacerbated by rising restrictions, both domestically and globally.

Risks to our view are finely balanced, however. Risk management considerations may lead the MPC to delay a rate hike, opting instead to wait for more information around the impact of Omicron on transmissions, hospitalisation, and vaccine efficacy.

Reuters’ David Milliken flags that economist are expecting Omicron, and Plan B, to hit growth....

So as Victoria Scholar, Head of Investment at interactive investor, points out, a ‘no change’ looks more likely today:

Wall Street has opened lower, despite the drop in US jobless claims to the lowest since 1969.

The Dow Jones industrial average has dropped by 124 points, or 0.35%, in early trading to 35,630, having racked up strong gains earlier this week.

Chemicals producer Dow Inc (-1.9%) is the top faller on the index of 30 large US companies, followed by aerospace firm Boeing (-1.8%) and construction equipment maker Caterpillar (-1.4%).

Tech stocks are stronger, keeping the Nasdaq Composite flat.

Back in the UK, people who send and receive parcels are to be better protected under proposed rules to improve how companies handle complaints amid a wave of problems with deliveries.

With Christmas a fortnight away and tighter Covid rules making many more shoppers reliant on parcels, the regulator Ofcom is cracking down on the sector, saying that UK consumers “should be treated more fairly”.

Ofcom plans to tighten up the rules on how firms deal with complaints, make it easier for people to contact companies and bring in better protections for disabled customers.

It warned that if it did not see “substantial improvements” in customer service and complaints handling, then it would consider enforcement action or further, tougher regulation.

Updated

US jobless claims falls to lowest since 1969

Just in: The number of Americans filing new claims for unemployment support has hit the lower level in over 50 years.

Just 184,000 ‘initial claims’ for jobless benefit were filed last week, on a seasonally adjusted basis, a drop of 43,000.

That’s a new pandemic low, and indeed the lowest since September 1969.

This indicates that US companies are continuing to hold onto their staff, as labor shortages push up earnings and leave companies with 11m vacancies to fill.

However, if you don’t apply seasonal adjustments, there was actually a 63,680 increase in jobless claims, to 280,665.

Updated

European stock markets are in the red today, as concerns over the severity of Omicron linger.

Shares had rallied earlier this week, on hopes that the latest variant might give mild symptoms, despite looking to be more transmissible than Delta.

But with Omicron’s impact still unproven, and new measures being introduced in England, investors are more cautious.

The FTSE 100 index of UK-focused companies has dropped by 25 points, or 0.35%, away from three-week highs seen on Tuesday. The pan-European Stoxx 600 is down 0.25%, with Spain’s IBEX down 0.6%.

European stock markets, December 09 2021
European stock markets today Photograph: Refinitiv

Fawad Razaqzada, analyst at Think Markets, says stocks have lost momentum:

With concerns about the ability of Omicron to cause serious illness still unproven, investors are likely to remain cautious when it comes to risk-taking. As we saw before, this should limit the upside for equities – and it has.

After all, the spread of the disease is putting significant pressure again on health systems around the world, meaning more growth-chocking restrictions and lockdowns might be required. So far, however, the market seems to think that it will just be mild restrictions, which will cause minimal damage to the economy, and in any case calls for a pause in rate hikes or faster tapering.

Updated

Bad news for crisp fans. Despite the improvement in availability of multipack crisps last week, the Walkers crisps shortage is set to extend deep into January, according to The Grocer.

Evergrande rated ‘restricted default’ by Fitch after missed payment

Shares in Evergrande jumped 4% in Hong Kong as investors anticipate intervention from the Beijing authorities after ratings agency Fitch declared that its overseas bonds are in default.

Victoria Scholar, head of investment at interactive investor, explains:

The embattled property giant has been teetering on the brink of default for several months now with the latest missed payment deadline a sign that the company is perilously close to collapse.

However the sense is that the Chinese authorities are standing by ready to stem any serious contagion and in fact there has already been some intervention from the central bank by injecting stimulus, from the local government and from Evergrande’s risk management committee including state members, which was set up to help eliminate future risks.

The risks around Evergrande have been signposted to the market for several months now and although comparisons have been made to the collapse of Lehman Brothers, the Wall Street behemoth in 2008, Evergrande’s international exposure is a lot smaller. A series of joint statements were issued this week by China’s securities regulator, the banking and insurance regulator and the central bank, suggesting that the risk to the broader property sector could in fact be contained.

A state-managed rescue would be the best-case scenario for Evergrande. However, the government has a difficult balance to strike. On the one hand, Beijing does not want to be seen as condoning the behaviour of a highly indebted company that has expanded at breakneck speed, given Beijing’s campaign to rein in corporate debt. On the other hand, Beijing will no doubt want to avert a systemic fallout in which Evergrande’s collapse endangers individual deposit holders, supplier businesses and China’s financial system.

Online furnishings seller Made.com has slashed its revenue guidance, as it warned that supply chain disruptions and shipping delays would defer up to £45m of its revenue into the new year.

The retailer said ongoing industry-wide disruptions were offsetting the impact of strong demand for its products, with extended factory closures in Vietnam, congestion in global ports and extended shipping times having already delayed deliveries to customers.

Made.com said those disruptions had “worsened in recent months, negatively impacting the timing of stock intake”. More here:

Omicron and Covid plan B makes December UK interest rate rise less likely

Uncertainty over Omicron, and the introduction of new restrictions in England, mean the Bank of England is less likely to raise interest rates next week, some experts say.

Economists and investors believe the UK central bank is more inclined to leave borrowing costs at record lows of 0.1%, at its meeting on 16th December.

Money market bets on a 15 basis point UK rate hike next week, to 0.25%, fell further to around 40% today. That’s down from 46% on Wednesday and nearly 70% at the beginning of last week, according to Refinitiv data reported by Reuters.

Another measure of interest rate probabilities, based on interest rate swaps, suggests there’s only a 25% chance of a hike next week.

Many in the City had expected a rate rise last month, so were surprised when the Monetary Policy Committee left borrowing costs on hold.

Now, the first increase in Bank Rate since the pandemic could slip into 2022, despite inflation exceeding 4% and the labour market looking relatively strong since the furlough scheme ended.

Martin Beck, chief economic advisor to the EY ITEM Club, he believes the MPC will likely hold fire on a rate rise next week:

The MPC bucked market expectations in November by choosing not to raise the Bank Rate. But investors’ current prediction that the committee will not increase rates in the December meeting looks like a more reliable bet, and a view the EY ITEM Club shares.

The new Omicron COVID-19 variant has complicated the MPC’s December decision, he explains:

The immediate and direct effect of the new variant’s discovery – a fall in oil and other commodity prices – means the forces affecting inflation are no longer all pointing upwards, and the variant poses numerous other challenges for the economic recovery.

New restrictions globally threaten to hold up supply chains even more, while consumers and businesses could reasonably be expected to become more cautious to spend.

Granted, if the new variant does worsen supply bottlenecks, the result could be even stronger inflationary pressures. But, as is the case with the global forces which have pushed inflation up in recent months, tighter monetary policy would not address price pressures from renewed COVID disruption. If Omicron’s economic impact were to prove more significant than expected, an interest rate rise in December’s meeting might have to be quickly reversed.

Raffi Boyadjian, lead investment analyst at XM, also believes rates could remain on hold until February 2022, due to the new measures announced last night.

Whilst the new guidelines are nowhere near as strict as the recent restrictions imposed in many other European nations, the UK is coming from a place of near-zero Covid rules so there’s likely to be a mild hit to economic growth.

More significantly, the Bank of England might be less confident to hike interest rates next week given the potentially weaker economic backdrop. Money markets have priced out the odds for a rate increase in December following yesterday’s announcement and are now looking at February for liftoff.

This is also keeping the pound near Wednesday’s one-year low against the US dollar today, below $1.32.

A Reuters poll of City economists, conducted this week, found that 25 thought Bank Rate would be left at 0.10% next week, while 21 predicted a rise to 0.25%.

Last week, MPC member Michael Saunders, who voted for an interest rate hike last month, said he wanted more information about the impact of the new Omicron coronavirus variant before deciding how to vote this time.

Updated

Gig economy workers to get employee rights under EU proposals

Gig economy companies operating in the European Union, such as Uber and Deliveroo, must ensure workers get the minimum wage, access to sick pay, holidays and other employment rights, unless they are genuinely independent contractors.

The plans come as part of new laws to crack down on fake self-employment.

Publishing long-awaited draft legislation on Thursday, the European Commission said the burden of proof on employment status would shift to companies, rather than the individuals that work for them.

Until now, gig economy workers have had to go to court to prove they are employees, or risk being denied basic rights.

Nicolas Schmit, EU commissioner for jobs and social rights, told the Guardian and other European newspapers that internet platforms “have used grey zones in our legislation [and] all possible ambiguities” to develop their business models, resulting in a “misclassification” of millions of workers.

Here’s the full story:

Updated

The City of London Corporation’s Policy Chair, Catherine McGuinness, has called on the government to set out a ‘clear roadmap’ back to normality in early 2022.

McGuinness says the fresh restriction in England will be a disappointment to businesses in the Square Mile, which have suffered from the move to home working in the pandemic.

“Christmas has been cancelled for many City shops, restaurants, pubs and other businesses that rely on footfall from workers in nearby offices.

“Everyone should act responsibly, including by getting the vaccine and any booster as soon as possible, wearing masks and testing regularly.

“We will urge City businesses, workers and residents to follow the new rules.

“But we also ask the Government to set out a clear roadmap to normality early in the new year and base all decisions on data.

“We need to find ways to live with the virus which allows the economy to prosper.”

Britain’s crisps shortage may finally be easing, after weeks of disruption after an IT problem at Walkers.

Just 1% of stores had run out of multipack crisps, when surveyed by Kantar between last Friday and this Monday, down from 4% a week earlier. Another 16% had short supplies of the snacks, down from 20% -- but still higher than crisp fans would like.

Instead, Ibuprofen painkillers and frozen turkeys were in short supply, or missing, at 17% of stores.

Updated

Dining out in UK at lowest level since May reopening

The front of the Ivy restaurant in Wimbledon village late last month
The front of the Ivy restaurant in Wimbledon village late last month Photograph: Amer Ghazzal/REX/Shutterstock

The number of people dining out across the UK has dropped to the lowest level since the reopening of indoor hospitality in May.

The average number of seated diners at UK restaurants fell by 6 percentage points in the week to Monday 6th December, according to the Office for National Statistics, to 105% of levels seen that week in 2019 before the pandemic.

That’s the lowest this figure has been since the week ending 17 May 2021, following a similar fall a week earlier when news of the Omicron variant broke.

It’s a sign that some companies have cancelled Christmas parties since Omicron emerged, as Clive Watson, chairman of the City Pub Group, reported this morning.

Back in August, diner numbers were over 30% higher than in 2019 as people flocked back to restaurants and pubs, with more people holidaying in the UK. This recovery has since faded, even before the move to Plan B in England.

UK seated diner numbers

Takings at many Pret A Manger stores fell last week - perhaps a sign that some office workers had returned to home working, and aren’t picking up their usual lunchtime sandwiches?

In today’s report on the UK economy, the ONS says:

Transactions at Pret A Manger stores in the week ending 2 December 2021 fell in 8 of the 10 locations; they remained lowest when compared with their January averages in London airport and London city stores at 76% and 85%, respectively.

Instead, spending on credit and debit cards has surged to their highest since before the first lockdown, jumping by 15 percentage points in the week to 2nd December.

Spending was boosted by Black Friday and the rush to buy Christmas presents early.

It could also show that people are moving their spending away from services and back to goods, points out Reuters’ Andy Bruce:

Updated

Pound near one-year lows as restrictions cloud the outlook

Sterling is becalmed near its lowest level in a year against the dollar today, with the move to Plan B clouding the outlook for the UK economy.

The pound is trading below $1.32, having hit $1.3165 yesterday for the first time since December 2020 when news of new pandemic restrictions broke.

The pound vs the US dollar over the last 12 months
The pound vs the US dollar over the last 12 months Photograph: Refinitiv

Market commentator Bill Blain says the UK’s stalling outlook and “political shenanigans” are weighing on sterling.

Working from Home has very clear economic implications – and kills the December party season. Consequences, consequences.

More and more the UK feels like a struggling health service with a inefficient nation attached. It’s not a good look.

The logo of FirstGroup

British transport company FirstGroup has reported that passenger growth at its buses has slipped in recent weeks, with the pandemic still overshadowing its recovery.

In its half-year report, FirstGroup told shareholders that:

There is some evidence of a slowdown in the rate of recovery recently, as the travel guidance and activity levels in Scotland and Wales and in many education settings across the UK remain somewhat restricted in light of the pandemic.

Passenger volumes at its First Bus operations rose to 71% of its 2019 levels on average in recent weeks.

FirstGroup, which sold the bulk of its North American transport business earlier this year, said it had managed a resilient financial performance, with passenger revenues and statutory operating profits higher.

But it left its financial expectations for this year unchanged, “recognising there is uncertainty around the pace of recovery in light of the evolving circumstances of the pandemic”.

Hospitality and travel shares drop

Shares in hospitality groups have dropped this morning, as investors anticipate that plan B restrictions will hurt the sector.

Restaurant Group, which runs the Wagamama, Frankie & Benny’s and Chiquito chains, are the biggest faller on the FTSE 250 index of mid-sized firms, down almost 4%.

Cinema operator Cineworld are down 2.75%.

On the larger FTSE 100 index, catering group Compass are down 1.2%, while Premier Inns owner Whitbread has lost 1.5%.

Airlines groups are also weaker, with British Airways parent company IAG dropping by 2.6% , and budget rivals easyJet (-2.3%) and Wizz Air (-2%) also lower.

The wider market has ticked marginally higher, with the FTSE 100 up 0.1% as investors continue to hope that the Omicron variant will prove to be mild....

Small businesses across England are concerned that the move to plan B will hurt their recoveries.

Eddie Young, a magician at Burton upon Trent-based Misterey Entertainment, says he already seen booking cancelled.

“The nightmares are starting all over again. I am starting to get cancellations already. This will likely be the final nail in the coffin for many small businesses.”

Denise Yeats, director of London-based Denise Yeats Creative Event Production, fears clients will be put off from holding events:

“To say that my heart has sunk is an understatement.

As an events specialist, my business was only just struggling to get back on its feet. I fear these new guidelines will only enhance the uncertainty of my clients to hold events. I really don’t know how much longer my business can survive.”

And in Market Harborough, Jo Ferreday of events company Sheer Edge fears that restrictions will run into next year:

“The majority of my income is based on live and in-person events so the move to Plan B has been a real blow, especially as there was no indication about how long these new restrictions will be in place. 2022 has a huge shadow of uncertainty over it.”

City centre pubs, and those which rely on trade from office workers, will be particularly hit by the move to home working in England from Monday (where possible) again.

It will also hurt brewers, who would have been hoping for strong sales this Christmas after the disruption a year ago.

Emma McClarkin, chief executive of the British Beer & Pub Association, warns it will threaten the viability of pubs to keep running -- echoing Clive Watson’s concerns this morning.

“Make no mistake, this is a huge blow for our sector as it further undermines consumer confidence and is devastating for pubs based near offices and in town centres,”

“The festive period is crucial to the recovery of our sector, so these restrictions could not have come at a more important trading time. They threaten the viability of pubs who will lose vital revenue over the Christmas period and so the Government will need to look at providing support.

“We are pleased though that covid-passports are not applicable to the vast majority of pubs, as Government has recognised this would have been totally unworkable. We still need clarifications and to see the detail on other aspects – including on facemasks.

Updated

UKHospitality: full business rates relief, grants, rent protection and extended VAT cuts needed

England’s move to Plan B risks ‘devastating’ hospitality firms at a vital time of the year, warns Kate Nicholls, the chief executive of UKHospitality.

She says that firms need full business rates relief, grants, rent protection and extended VAT cuts to cushion the impact.

“While the government clearly acknowledges that hospitality is safe and can continue to host celebrations in the lead up to Christmas, the measures announced today will significantly impact consumer confidence and be particularly devastating to city and town centre venues.

As such, they risk devastating the hospitality sector amid its most important time of the year. We therefore desperately need support if we are to survive this latest set of restrictions and urge the government to stand behind our industry.

That means full business rates relief, grants, rent protection and extended VAT reductions. Anything less would prove catastrophic.”

Introduction: Government urged to provide taxpayer support to help firms through Plan B

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

UK hospitality businesses are urging the government to provide fresh emergency financial support as England moves to Covid Plan B, amid fears of an exponential rise in the Omicron variant.

Otherwise, they say, many firms risk running out of cash and collapsing, if they miss out on the crucial boost from Christmas trading.

Last night’s announcement that people must work from home where possible from Monday and that face masks would be a legal requirement in most public indoor areas such as theatres and cinemas from Friday, is a bruising blow to pubs and restaurants - even though there will be exemptions for eating and drinking in hospitality venues.

Vaccine passports will be needed to attend large, potentially crowded venues such as nightclubs from next week -- which will remain open.

Clive Watson, chairman of the City Pub Group, says there had already been a ‘meaningful drop-off’ in office party bookings from about 10 days ago, after the first Omicron travel restrictions were announced.

He told Radio 4’s Today Programme that:

There’s definitely been a drop-off in those types of bookings. Going forward, after yesterday’s announcement that’s only going to accelerate.

The government has to appreciate that Christmas is a crucial time for hospitality, Watson says.

A lot of businesses, especially late-night venues and restaurants, probably make a third of their profit in December, he explains. That tides them through the quieter January and February.

If they can’t trade as normal, they can’t build up the cash reserves they need.

It’s more than a body blow, insists Watson, whose firm owns 45 pubs across England and Wales.

It’s almost... taking off the life support machine yet again.

Watson warns that existing support, such as lower VAT rate for hospitality and business rates relief, is not enough.

His message to government:

Please, please, give us that enhanced state aid...to tide us over to those leaner months in January and February

Otherwise, a lot of businesses in our sector will run out of cash.

The Omicron variant had already dented consumer confidence, and sectors of the economy which rely on face-to-face interactions and spending by office workers now face a much less cheery Christmas.

Other business groups have also warned that the new restrictions will have a serious impact on hospitality firms, so taxpayer help will be needed.

There’s also understandable unhappiness that the changes are coming in with such little notice.

Baroness Ruby McGregor-Smith, president of the British Chambers of Commerce, warned that last night’s announcement will damage business confidence, saying:

“We have been calling on the UK government for several months to set out what contingency plans for business would look like if further restrictions were needed this winter.

“Yet again, firms are now being asked to make changes at the very last minute. Restrictions will also impact on consumer behaviour with knock-on effects which could risk the fragile recovery, order books and revenues.”

Unions fear a rise in unemployment unless the furlough scheme, which ended in September, is reactivated.

Frances O’Grady, general secretary of the TUC, said:

“Requiring people to work from home over the busy Christmas period will hit jobs – unless ministers bring back furlough.

Cleaners, receptionists, conference and banqueting staff and hospitality and retail workers will be short of work if people don’t come into offices”.

The agenda

  • 7am: Germany’s balance of trade for October
  • 9.30am GMT: Real-time indicators of economic activity and social change in the UK are published
  • 1.30pm GMT: US weekly jobless figures

Updated

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