More than a fifth of bars and restaurants in the North couls shut permanently if Tier 3 lockdowns are imposed across the North, it has been warned.
Tier 3 restrictions have been imposed on the Liverpool city region and Lancashire, but Greater Manchester and the North East are resisting the moves, saying there is not enough support available to businesses affected.
Now the Red Flag Alert, which monitors businesses in financial distress, is warning that the highest level of lockdowns would put 3,754 venues out of business – 22% of firms in the hospitality sector.
The warning comes after data showing that at the end of June, the number of Northern bars and restaurants in significant financial distress had increased by 4.5% since the national lockdown in March 2020.
These are businesses with either County Court Judgements (CCJs) filed against them for missed payments or which are showing a consistent deterioration in financial performance including working capital, financial liabilities and losses.
Mark Halstead, managing director of Red Flag Alert, said: “Unfortunately, the new local furlough scheme and cash grants will not be enough for many of the struggling bars and restaurants in the North of England to survive a Tier 3 lockdown.
“They simply don’t have the cashflow and financial health to sustain closing their doors again so soon after the easing of the national lockdown.
“Many of these bars and restaurants are operating on the breadline and the highest level of the new lockdown system will prove the final nail in the coffin. There’s then the concern of how their insolvencies will affect the rest of the supply chain they owe money to.
“Closing bars and restaurants runs much deeper than the economic woe affecting the premises you see on high streets. It’ll end up costing suppliers’ tens of millions of pounds in write-offs over the coming months, which risks jobs and livelihoods nationwide.”
The British Beer and Pub Association has also expressed concern for the future of the UK hospitality sector, saying the Tier 2 level in place in many parts of England is crippling venues.
Chief executive Emma McClarkin said: “All pubs are already particularly struggling due to the current restrictions of the 10pm curfew, rule of six and low consumer confidence exacerbated by low footfall caused by a lack of tourists and commuters. These further restrictions will leave most pubs fighting for their very survival.
“Tier two measures mean pubs can remain open, but households cannot mix inside them. This completely kills our pubs’ business model making many of them totally unviable, yet under tier two restrictions they are not eligible for any additional financial support from Government, unlike in tier three where additional support is provided. The knock-on effect to brewers and pubs’ supply chain partners will devastate them too without more support.
“Without additional financial support, specifically access to financial grants and a job retention scheme closer to that in tier three, many pubs will be closing their doors for good.”