Impact of Lockdown 2.0 on businesses
The UK government recently announced national restrictions in an effort to reduce the spread of the COVID-19 pandemic. This new "Lockdown 2.0” will begin at 00:01 on Thursday, 5th November. These restrictions will be in force for four weeks, and are set to be reviewed on the 2nd December.
Like the first lockdown in spring, this one will likely spell disaster for many businesses. Experts predict retail and hospitality to be some of the worst affected. High Street outlets may be on the brink of collapse. This will be particularly devastating to many businesses considering the boost in sales many of them receive between November and December every year. All the while, e-commerce sites like Amazon continue to see boosts in purchases through their site. But experts also see a glimmer of hope that the effects of the second lockdown won’t destroy the economy completely.
Retail and hospitality
November and December tend to be two of the best months of the year for businesses in the retail and hospitality sector. According to the Guardian, shoppers spend around ￡50bn on goods other than food during December. During this time people tend to splurge in the retail sector, as they buy electronics, clothes, toys and other gifts for christmas. Lockdown 2.0 will classify most of these stores as “non essential”, forcing them to close throughout November, missing Black Friday, one of the most important business days during the season.
Christmas is a time for people to connect with their family and friends. For the latter, that often involves going out to pubs and restaurants. Like the retail sector, many of these restaurants and pubs earn nearly half their annual profits during this season. Forcing them shut during this time of the year may cause many of these institutions to operate a severe loss this year, where they previously expected to soften the blow of the first lockdown during the holidays. Amazon, unlike most other retailers seems to have thrived in the Covid conditions and experts fear that the second lockdown will push more shoppers to Amazon and decimate many independent retailers
Real Estate
On a brighter note, the second lockdown is less strict when it comes to the housing market. The industry has escaped the severity of the lockdown as many jobs can still be performed if the COVID safety guidance is followed. Renters and homeowners will be able to move in and out of their homes. Construction, along with plumbers, electricians and other tradesmen will be able to operate, even in customer’s homes.
Those who booked short breaks in the UK in November will get a refund as directed by the Competition and Markets Authority. However, some companies like Airbnb are fighting this stance, stating that the standard cancellation terms will be applied, potentially leaving people to lose up to half their money.
Some hope
Unlike last spring, there is a certain level of optimism when it comes to many businesses. These businesses are adaptable, and the first lockdown allowed them to establish systems and procedures to work completely online, or in person with adequate safety measures. The government decision to allow schools to remain open will indirectly contribute a lot to the economy, as parents can work without worrying about taking care of their children.
This is perhaps why the UK's GDP is expected to fall only by less than 10%, far lower than it did between March- June. Hopefully the short lockdown in November will allow for the Christmas season to come out with a bang, lifting people’s spirits and helping struggling businesses survive. There might be hope after all.
November 2020