All eyes will be on the Chancellor tomorrow as he sets out his eagerly awaited budget with the UK embarking on its irreversible march to freedom out of lockdown and measures are sought to ensure a sustainable economic recovery for the nation.
The impact of the pandemic has been felt across all industry sectors but services which require human interaction such as traditional retail, hospitality, travel, and leisure have suffered the greatest pressure from periods of prolonged lockdown.
If we look at hospitality, Wednesday’s announcement needs to include targeted support to this sector particularly given the disproportionate amount of young people traditionally engaged within, to instil a degree of optimism around their future employment prospects and as spending patterns have dramatically changed during lockdown to place a greater emphasis on job support, retraining and apprenticeships.
Figures from HMRC show that the number of furloughed workers in the UK rose by 700,000 to 4.7m in January during lockdown 3 and that employees in hospitality, women and young adults were most likely to be away from their jobs.
With many of these small businesses hanging on by their fingertips with cashflow having dried up and costs beginning to mount, having an easy and flexible access to working capital to fund their plans and ambitions to “Open Up” should be made readily available. Especially as more than half of firms within the hospitality and among other consumer services are now reporting that they have less than four months cash in reserve. [Source: ONS]
We have already seen VAT cuts to 5% in this sector and business rate holidays. These should be and are expected to be prolonged/ extended together with plans to reveal a £5bn fund to offer “restart” grants for affected business that include night clubs, theatres, high street shops, gyms, pubs, and restaurants.
Within the supply chain, many recruitment companies and agencies specialising in the provision of temporary staff and contractors across the hospitality sector should be considering turnover driven finance solutions such as invoice finance to provide the immediate cashflow funding to accompany an expected increased demand for personnel. Similarly, hospitality-based businesses keen to reignite themselves within this much missed sector who offer credit terms to their customers would benefit from this kind of flexible funding arrangement.