Businesses demand taxpayer aid as Plan B in England puts ‘fragile’ recovery at risk

Business

The prospect of new Plan B COVID-19 restrictions has sent the pound to a one-year low and stirred dismay in the leisure and travel sectors.

Sterling dropped below $1.32 against the US dollar to its lowest level since December last year while the UK currency also slid against the euro.

In stock markets, travel and leisure shares – which had been recovering from an initial Omicron shock sell-off – were also hit.

pound-dollar one year chart 8/12/21
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The pound hit a one-year low versus the dollar

The Night Time Industries Association (NTIA) said Plan B restrictions, including vaccine passports for large events and work from home guidance, would have a “devastating impact”.

Chief executive Michael Kill also questioned the “timing and rationale” for the announcement as the prime minister faces a furore over an alleged Downing Street party last Christmas.

“Nightclubs and bars must not be thrown under the bus for the Prime Minister to save his own skin,” Mr Kill said.

The pound’s weakness reflects the likelihood that further restrictions will hold back the wider economy, dampening already diminishing prospects of a pre-Christmas interest rate hike.

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In stocks, British Airways owner International Airlines Group – already badly hit after the government imposed travel restrictions in response to Omicron – was among the FTSE 100’s biggest fallers as it slid more than 3%.

Aero engine maker Rolls-Royce also lost 3% of its value while easyJet dipped nearly 4% and Dublin-listed Ryanair dropped by more than 2%.

Cineworld blamed a lack of movie releases during the pandemic for its decision to shut screens last October. Pic: AP
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Shares in Cineworld fell Pic: AP

The falls were also partly in response from an update from Tui, which while sounding an optimistic note about prospects for coming months, revealed that Omicron fears were already hitting bookings – sending its shares down by 2%.

In the wider leisure sector, hopes of a pick-up for cinemas, restaurants and pubs were punctured by the prospect of Plan B.

Cineworld’s shares fell 5% while The Restaurant Group, whose brands include Wagamama and Frankie & Benny’s, lost nearly 6% and Mitchells & Butlers – owner of chains such as All Bar One and Harvester – lost more than 2%.

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