Covid: £500million Plan B blow to London’s economy each month


ity forecasters on Friday warned that the Plan B round of Covid restrictions ordered by Boris Johnson will hit the still fragile London economy by up to £500 million a month.

Fearful business leaders have denounced the measures — which include new work from home guidance and compulsory vaccine passports for entry to nightclubs — as a “hammer-blow” to vulnerable sectors such as hospitality and retail.

Cancellations of office Christmas parties have already rocketed and the number of commuters travelling into central London is expected to slump, at least until the rules are lifted.

Simon French, chief economist at City brokers Panmure Gordon, said reduced footfall in areas such as the West End and the City combined with smaller attendances at large events where vaccine passports are obligatory will cut output by one to 1.5 per cent.

That equates to between £300 and £500 million a month in the capital. Other analysts have estimated the scale of the blow to London to be even higher.

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Calculations by HospitalityUK and the Croydon Business Improvement District suggest that the loss of revenue in December alone could be as much as £1 billion. The capital has been the region hit hardest by the pandemic with its unemployment rate the highest in the UK.

It rose from 4.8 per cent immediately before it broke out to a peak of 7.4 per cent last winter. It has since fallen back to 5.6 per cent, still the worst in the country. London had been showing promising signs of a strong recovery in November with West End footfall exceeding 2019 levels at the weekend after the Christmas lights were turned on. That revival is now certain to be stopped in its tracks by the latest set of rules unveiled on Wednesday.

Jace Tyrrell, chief executive of New West End Company, which represents traders in Oxford Street, Regent Street, Bond Street and Mayfair, said: “While our top priority remains the safety and wellbeing of our customers and colleagues, and we fully support mandatory mask wearing in shops, the renewed work from home order during the most important trading period of the year is a hammer blow for our retail and leisure tenants.”

Richard Burge, chief executive of London Chamber of Commerce and Industry, said: “We call on the Chancellor to announce new financial support for the multitude of businesses operating in sectors that will face further hardship following this announcement, particularly retail and hospitality businesses which rely on Christmas trade.”

The Prime Minister this week said the move to Plan B was vital and warned it was clear that the new strain was “growing much faster” than Delta and cases of Omicron could be doubling every two or three days. Health Secretary Sajid Javid said the new rules will buy time against the Omicron variant amid a “credible risk” of a crisis in the NHS. A further 249 cases were recorded in the UK yesterday, taking the total to be identified to 817. However, the true figure is believed to be much higher.

Rowena Howie, London policy chair of the Federation of Small Business, said: “The timing of the restrictions has left many small firms in London fearing how they will pay quarterly rents as opposed to benefiting from what should be their ‘golden quarter’ of trading.” John Dickie, chief executive of business group London First, said: “Now is the time to reintroduce support for affected firms.”

The UK economy grew by just 0.1 per cent in October, official figures show. A fall in people dining out and reductions in oil extraction and gas use meant growth came in lower than expected.