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Tourism and hospitality sectors can begin to rebuild London business confidence

14th Aug 20 7:36 am

Each month, Lloyds Bank’s Business Barometer measures confidence across London’s business community, exploring how the city’s firms feel about their trading prospects, the strength of the economy and their future.

The first seven months of 2020 have brought exceptional change and disruption – and it has all been captured by the Barometer. Back in January, confidence in the capital was higher than in any other region of the UK. Despite a slight dip in sentiment, London came out top again in February, with more than a quarter of firms saying they expected to hire more staff over the next year.

As with so many businesses nationwide, everything changed for London firms when Covid-19 hit in March, resulting in a 17-point drop in confidence to 12%. By April, as lockdown measures shut down swathes of the economy, the Barometer reported a 40-point drop in confidence to -28%. Firms’ confidence rose slightly but then fell again during the remainder of the second quarter, and the most recent Barometer reading, for July, stood at -21%.

Despite remaining in negative territory, the reopening of the tourism and hospitality sectors will have contributed towards London business confidence improving slightly in July. We hope to see this continue in the months ahead as more firms, pending no second wave of coronavirus, reopen their doors and consumers regain confidence.

Firms adapting to drive economic recovery

At Lloyds Bank we’ve provided funding to help businesses weather the initial wave of this crisis and prepare themselves for the rest of 2020 and beyond.

Take award-winning Turkish restaurant Cappadocia, in Kingston, which was forced to close its doors at the beginning of lockdown. We backed owner Jimmy Gizli and his team, who wanted to do whatever they could to support the local community through the crisis, with a range of facilities, including a £100,000 overdraft for the restaurant.

As a result, Jimmy and his chefs were able to reopen the kitchen and, teaming up with volunteers at KingsGate Church, cook and deliver 450 meals to vulnerable people stuck at home self-isolating, as well as 750 meals for NHS workers at Kingston Hospital.

Jimmy and the team are back open now ready to welcome guests back.

Cappadocia is just one example of how London’s tourism and hospitality sector has shown resilience and continued to innovate during challenging times.

From take-away options to new delivery services, firms have diversified to survive and set themselves up for a stronger future. Indeed, one of the unexpected positives that has grown out of the shadow of the pandemic is that many businesses have initiated new business practises – whether it be operating remotely, or expanding their offerings.

SMEs across the capital have been forced to take a fresh look at their business models, but many are now finding that new processes may also be profitable in the long-term.

Planning for a brighter future

Although lockdown restrictions are being tentatively eased, we are a long way from being back to business as usual. The key concern for many, personally and professionally, is a second or even third wave. Local or national lockdowns, while essential for health, are challenging for business.

For those in industries like sports and entertainment, coronavirus is still placing huge limitations on their ability to operate. It was very strange to watch the recent FA Cup final, ordinarily a much-anticipated day out for generations of football fans, played at an empty Wembley Stadium! This is why it’s critical that businesses across all sectors are supported not just during the worst of lockdown, but as they emerge from it, too.

The UK government’s newly announced VAT reduction is a positive move in this respect, and will provide a much-needed boost to many London businesses. So will the ‘Eat Out to Help Out’ scheme designed to help pubs, hotels, cafes and restaurants tempt their customers back in, get consumers into spending mode and boost confidence. Early signs are that this seems to be making a difference already.

At Lloyds Bank, we too have a vital role to play in supporting businesses in the next phase of recovery, whatever that may look like.

The months ahead will bring new hurdles and headwinds, but there will also be opportunities for growth. Whatever the circumstances, the passion, tenacity and drive of the London business community is clear, and we will continue to help them try to build back safely in the weeks and months ahead.

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