The UK’s gross domestic product (GDP) grew 0.4% in August 2021, according to the latest figures from the Office for National Statistics (ONS). It was a strong month for the hospitality sector which benefitted from the easing of Covid-19 restrictions in England and Wales.
Accommodation and food service activities were the main contributor to services growth in August, after an increase of 10.3%. There was “particularly strong growth” in accommodation, which rose by 22.9% and was boosted by hotels and campsites. There was also a 5.9% increase in food and beverage service activities.
The second-largest contribution to services growth (8.5%) came from the arts, entertainment and recreation sectors. “Creative, arts and entertainment activities grew by 24.7% in the first full month of coronavirus restrictions on social distancing being lifted in England, and later in Wales,” the ONS report said.
While GDP increased by 0.4% in August, it was still 0.8% below the pre-pandemic level of February 2020. The ONS also revised GDP for July 2021 down from 0.1% growth to a 0.1% fall. This was due to a downward revision of data for the manufacture of motor vehicles, oil and gas, and improvements to how health output is measured, Politico reported.
Last year Britain’s economy shrank by 9.7% as the coronavirus pandemic “crushed economic activity”, Sky News said. This was the biggest annual decline in 99 years.
Rush of closures
The contribution from bars, restaurants and festivals to the UK’s economic growth meant there was some cheer for the hospitality sector in the past few months. However, new research has revealed the devastating impact that Covid has had on licensed premises.
Compared with the start of the pandemic there are almost 10,000 fewer licensed premises across Britain. And despite the reopening of the economy, there has been a “rush of closures” taking place since the summer, Sky News reported.
According to the latest market recovery monitor from CGA and AlixPartners, the sector, which includes bars, pubs and restaurants, has shrunk by 9,900 sites to date. Between July and September alone there were 980 closures – a rate of 16 per day.
A challenging winter
The hospitality industry remains under “severe pressure” from the effects of Covid-19, plus a range of “operational challenges” including labour shortages, disruption to supply and rising costs, the Harpers Wine & Spirit trade magazine reported.
The plight of nightclubs during the pandemic was also highlighted in the market recovery report. Despite being able to trade from July, the number of nightclubs in Britain decreased by nearly 100 to just over 1,000 by September – a drop of 9% in just two months.
Graeme Smith, MD of AlixPartners, said the figures are a “stark reminder” that the full lifting of restrictions in July did not signal an end to the challenges faced by hospitality businesses. Demand “remains strong”, he added, but with staff shortages, utility cost inflation and supply-chain disruption, there are “renewed efforts to secure continued government support to the industry to help it weather this storm as the reopening and rehabilitation process continues through what may be a challenging winter”.