The Institute for Fiscal Studies has added to pressure from the hospitality sector for more business support by explaining that the chancellor can afford to step in.
IFS director Paul Johnson told the BBC that, given figures showing the government borrowed less last month and despite higher interest rates, the chancellor would be able to afford to meet demands from pubs, restaurants and nightclubs for financial support.
The gap between government spending and tax income stood at £17.4bn in November, £4.9bn down on a year earlier when the furlough scheme was in full swing, but still the second highest gap since monthly records began in 1993.
People’s reluctance to go out because of fear of the Omicron variant of Covid has caused businesses to struggle, at a time when many hospitality firms would expect to make a sizeable proportion of their annual profits.
However, Johnson conceded that it would be “very hard indeed” to provide targeted support to those who needed it most, given that city centres were harder hit than other areas.
Restrictions at work
He added that fears of fuelling high inflation meant Sunak would be worried about “throwing more billions into the economy at this stage”.
On Monday the chancellor met business leaders who want financial support. Hospitality and entertainment firms are calling for a clear decision from the government on whether to expect further Covid restrictions in England in the coming days.
Prime Minister Boris Johnson did not announce any new measures on Monday, but said data was being reviewed “hour by hour”.
London mayor Sadiq Khan warned time was running out and that, without business support, jobs would be lost. He wrote on Twitter: “Jobs. Will. Be. Lost. The government must understand that failure to provide immediate support to hospitality, retail and culture is a failure of leadership for the millions who depend on them for their livelihoods. Time is running out – they must act now.”
CEO of UK Hospitality Kate Nicholls had earlier written: “Businesses are in limbo having lost 40-60% of December trade and with big rent and rate bills and staff wages to pay at end of month.”
Cabinet Office minister Stephen Barclay said the government would say more about the discussions with business leaders “later” and urged people to have a cautious Christmas.
Meanwhile, health secretary Sajid Javid is understood to want people with Covid to isolate for seven days, instead of 10, provided clinical advice supports the change. This would help ease staff shortages across the NHS and other organisations he believes.
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