UK’s Rishi Sunak set to boost financial aid for struggling hospitality sector

Surge in Covid-19 cases forced regions into lockdown hitting pubs and restaurants hard

FILE PHOTO: Britain's Chancellor of the Exchequer Rishi Sunak pictured in  London, Britain October 5, 2020. Leon Neal/Pool via REUTERS/File Photo

Britain’s finance minister Rishi Sunak will unveil further financial support for struggling hospitality businesses affected by the Covid-19 pandemic on Thursday, with pubs and restaurants in virus-hit areas likely to receive funds after a steep drop in business.

Mr Sunak is set to address parliament on the measures as a resurgence in the number of cases comes at the same time as the government's main furlough scheme concludes at the end of this month.

"Hopefully … we'll see the chancellor tack a little bit, trim the sails, to make sure we're getting the right balance to support the economy properly," police minister Kit Malthouse told the BBC on Thursday.

Britain’s public sector borrowing surged to £36.1 billion ($47.41bn) in September, £28.4bn more than a year earlier, as the government’s heavy spending to prop up the economy continued amid the Covid-19 pandemic.

Britain’s budget deficit in the first half of the fiscal year, from April to September, climbed to £208.5bn – the highest since records began in 1993 – as extra spending was needed to pay furlough wages and support businesses.

While Mr Sunak acknowledged that the coronavirus pandemic has had a "significant impact" on the country's public finances, he said "things would have been far worse".

Britain has suffered Europe's highest death toll from coronavirus, as well as the severest economic hit of any major advanced economy. Cases are now climbing again rapidly, with a record 26,688 new cases reported on Wednesday.

Without extra support, unemployment is forecast to rise by more than 1 million before the end of the year.

Restaurants and pubs in areas under Tier-2 rules, meaning there is a “high” risk of infections locally, are required to close by 10pm and separate households are banned from mixing indoors.

Currently, the financial support for companies in these areas is less generous than for businesses in regions where they have been told to close entirely.

From next month, only businesses that are legally required to close completely to the public will be able to furlough employees. Those employees will receive two-thirds of their wages, rather than 80 per cent previously.

Others employing staff part-time will receive much more limited support for their wage bills.

The government has clashed with regional politicians in north-west England over the scale of aid available to businesses and workers in areas which have had the highest level of restrictions.

Andy Burnham, the mayor of Greater Manchester, said he would be “looking closely” at the announcement, after he was embroiled in debates with ministers for days over what support businesses in his region should get for their move into Tier 3, the highest risk category.

“Greater Manchester has been in ‘high’ alert for three months but our hospitality businesses haven’t had any emergency support,” he said.