Via Yahoo Finance

The crisis in hospitality will cost the economy £73bn this year, experts warned as battered pubs and restaurants prepare to reopen on Saturday.

A combination of lost tourism, weak consumer spending and operating constraints due to social distancing mean that more than half of the industry’s £133bn annual sales are set to be wiped out in 2020, according to trade body UKHospitality.

The projections, which are based on official data, underscore the scale of the challenge facing pubs, restaurants and other hospitality outlets as they welcome back customers this weekend.

Pubs and restaurants could face months of dire trading with less than a fifth of Britons planning to immediately return when they reopen, according to new polling by RBC Capital Markets.  

Consumers ranked eating and drinking out as their highest priority activity after lockdown – but only two in five plan to return before August, and fewer than a fifth will immediately go back.

The bank’s survey also found that more than half of drinkers and diners expected to go out less often than they did before Covid-19 struck, piling up further pressure.

Was lockdown worth it? Economy

The majority of consumers are desperate to eat and drink out but there is still a significant undertone of caution, said RBC analyst Christine Zhou. She said: “Don’t expect a stampede.”

Sales across the industry are expected to be 65pc lower in July than they were a year earlier, UKHospitality said, improving to a 35pc reduction in revenues for the rest of the year.

Sales were down 90pc in March and April, the first two months of lockdown, before picking up slightly in May and June as outlets began operating takeaway and delivery services.

READ ALSO  China treads cautiously in the face of US sanctions

The predicted loss in revenue at Britain’s pubs, restaurants, hotels and other hospitality outlets is expected to come at a significant cost to the public purse.

Around £20bn in lost VAT and other taxes from hospitality firms will be missing from the Government’s coffers this year as a result. 

Kate Nicholls, chief executive of UKHospitality, said: “The size of the loss over the last few months dwarfs any of the opportunities that pubs and restaurants got for reopening and resuming revenues.

“It underlines the importance of the government not moving straight from rescue to recovery and making sure that these businesses are supported so that they can play their part when that recovery comes for them.”