Today's business and finance round up 20th December 2021
😦Hospitality sector cries out for gov support
20th December 2021
Bite-sized business news from the UK and beyond
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Hospitality sector cries out for gov support
Online grocer Farmdrop goes bust
ECONOMYHospitality sector cries out for gov support
What’s going on?There have been widespread calls from restauranteurs, chefs, pub owners and hospitality leaders for the government to act quickly to support the sector as it faces another festive season impacted by Covid restrictions.
Why is this important?
December is a crucial month for the hospitality sector, in a normal year 25% of annual profits would be taken in this month alone. The discovery of the Omicron variant of Covid-19 has kicked into gear the government’s “Plan B” which includes the return of work from home guidance and mandatory face coverings in indoor venues.With the possibility of more restrictions looming, pubs, restaurants and venues have seen a raft of pre-Christmas event cancellations and a slowdown in trade as people stay home. The Chancellor Rishi Sunak cut short a trip to the US to travel back to the UK for talks with hospitality leaders over the weekend.He’s facing increasing pressure to reintroduce government support for businesses like the furlough scheme to protect employee wages. So far no extra measures have been announced. Instead the Chancellor has pointed to the ongoing relief available to hospitality businesses, including the reduced rate of VAT in place until the March, and the business rates holiday which is in place until the June 2022.TakeawayThe government is not ruling out introducing additional Covid restrictions before Christmas in what would ordinarily be one of the busiest weeks of the year for the hospitality sector. The longer the uncertainty continues the greater the pressure will be for the Chancellor to do more to help businesses. But with national debt already at peacetime highs and tax rises on the way to pay for past pandemic-related support, the government could find it hard to justify more spending.
FOODOnline grocer Farmdrop goes bust
Over the weekend Farmdrop closed down leaving its 10,000 customers without food shopping one week before Christmas.The London-based online supermarket was known for its ethically sourced fresh food and was founded in 2012 by a former City banker.It’s a surprising end to a business that experienced rapid growth during the pandemic as locked-down consumers turned to online deliveries.But the company said the growth in orders since March 2020 didn’t translate into profits and it posted a £10m loss in the past year. Even though it raised over $40m in funds in nine years this wasn’t enough to keep it afloat and it said it struggled to secure the extra cash needed to continue. Last orders were delivered on Thursday.Disgruntled customers and suppliers took to social media to complain they were owed money. It will now be up to administrators to determine who gets paid and how much.
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