Hospitality circuit breaker lockdown could wipe £1bn off UK GDP, research shows
A two-week circuit breaker lockdown to reduce the spread of coronavirus could cost the UK economy around £1bn and result in more hospitality job losses, the latest research showed.
Ministers have reportedly mulled closing pubs and restaurants and ordering Britons to reduce social contacts for at least two weeks in a bid to halt a second wave of Covid-19.
Analysts at Deutsche Bank said a two week lockdown would wipe out 70 per cent of food and accommodation output, resulting in a one per cent drop in monthly GDP.
The fall in GDP could cost the economy around £1bn.
The research note added that the cost of a circuit breaker would be material, but “far lower than a full blown lockdown”
However it said a temporary shutdown of the sector, which has already suffered mass job losses following the first UK-wide lockdown this summer, would result in further redundancies and weaker output elsewhere in the economy.
Food and accommodation employees are currently “highly vulnerable” to redundancies, as around a third remain on partial or full furlough, which is the highest among all sectors except for arts and recreation.
“Further disruption will likely prolong the industry’s recovery,” the analyst note said.
“While we don’t account for these costs in our estimate, the scarring effects are likely to be non-negligible, reducing the industry’s supply potential beyond the near term”.
The hospitality sector yesterday warned that there will be more than half a million permanent job losses due to the impact of local lockdown restrictions and the 10pm curfew on pubs and restaurants.
Kate Nicholls, chief executive of industry body UK Hospitality, told the Treasury Committee that recent restrictions meant she needed to revise up a forecast of 560,000 permanent job losses, out of 900,000 currently furloughed workers.
“We anticipate that number will be far higher now as a result of the local restrictions, the national constraints on events, working from home, the curfew etc,” she told the committee, which is examining job support measures.