22nd December 2021
Bite-sized business news from the UK and beyond
Good morning This is the last Market Loop of 2021! Thank you so much for reading, I really hope it's helped you start the day smarter by informing you on the top business stories from the UK and beyond. Normal service will resume in January.Finally congratulations to Corinne from London, the winner of the £100 Deliveroo voucher, enjoy!P.S. All we want for Christmas is for you to sign up 1 family member or friend to Market Loop. That would be amazing.
£1bn support for Covid hit firms
Energy bills could rise by over 50%
ECONOMY£1bn support for Covid hit firms
What’s going on?Yesterday the government announced a new £1bn rescue package to help industries worst hit by the recent Omicron-related downturn in economic activity.
Why is this important?
The discovery of the Omicron variant of Covid-19 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. December is a crucial month for the hospitality sector, in a normal year 25% of annual profits would be taken in this month alone. After weeks of pressure from the hospitality industry, the Chancellor has finally succumbed to calls to support Covid impacted businesses. £1bn of funding has been allocated to the following areas:
£680m for grants to pubs, bars, cinemas and restaurants to receive a one-off no strings attached payment of £6,000 per venue.
£102m for English local councils to help non-hospitality businesses they think are most in need of support.
£30m for museums and theatres.
£154m for the Scottish, Welsh and Northern Irish devolved governments to use on their own schemes.
TakeawayPlan B, growing Covid cases and fears of Omicron have arguably been almost as damaging as a full-blown lockdown forcing the government into action.Although the hospitality sector has welcomed the new funding, the question remains what happens if even more restrictions are introduced.But before any more support can be announced the Chancellor will need to consider the already weak public finance position. Government borrowing has ballooned to cope deal with Covid and national debt is at its highest level since the 1960s.
ENERGYEnergy bills could rise by over 50%
The Christmas song goes “Baby it’s cold outside” but with soaring energy prices it may also be cold inside many homes this winter.European gas and electricity prices – already up x5 this year – have risen to new highs this week driven by a drop in temperatures, raising demand, and lower supplies from Russia and France.It comes as industry experts predicted that energy bills for UK households could jump by over 50% to £2,000 a year from April.The energy regulator sets a price cap twice a year based on wholesale prices, it’s currently at its highest level of £1,277 but will be reset next Spring undoubtedly to a new record. Dozens of energy providers have gone bust in recent months, impacting 4m customers, as they’ve been unable to deal with the unprecedented spike in prices. The government and the regulator are facing pressure to do more to protect household finances. But not all causes of the situation are controllable. For instance, 2021 has been a bad year for wind power and a longer and colder than usual winter last year ran down gas supplies. The UK also has lower levels of gas reserves compared to the rest of Europe making it more vulnerable global gas prices.
Stat of the day
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Merry Christmas and Happy New Year!