The re-opening of shops has provided much-needed relief for retailers in the past two weeks, although a large number are thought to be in financial distress as Covid-19 has caused shopper numbers to slump.

Footfall was down by more than 50 per cent year-on-year in the last week of June, said the British Retail Consortium (BRC). Neverthless, this was some improvement on a dire May, when footfall was down 82 per cent.

Shops reopened on 15 June in England after a three-month lockdown to help slow the spread of the coronavirus.

“Consumers have benefited as shop prices have fallen for the 13th consecutive month. However the situation for many retailers, such as those in clothing and footwear, remains very challenging. Sales have dropped significantly since mid-March and two thirds of businesses are reporting turnover below pre-crisis levels, meaning there is a serious risk to jobs as a result,” said Helen Dickinson, chief executive at the BRC.

Insolvency risk

Separately, it is feared 35 per cent of businesses in the UK are at risk of insolvency – with retail and hospitality firms the most at risk.

In a poll by consultancy The Centre for Economics and Business Research, 17 per cent of firms said there was a moderate to high risk of going insolvent, with a further 18 per cent reporting to be in some financial distress.

However, economists said it was encouraging that 65 per cent of respondents felt there was no risk of collapse.

Hospitality businesses should also feel some relief this weekend when pubs, bars, restaurants and hotels are allowed to re-open. According to the RAC, around 10 million drivers will take to the roads this weekend to celebrate the easing of lockdown on 4 July.

James Endersby, chief executive at data firm Opinium, said: “A light at the end of the tunnel does appear to be surfacing for some businesses across the country – with current trading conditions and future prospects both improving.”

The hospitality and tourism industry employs around 1.6 million people across 127,000 businesses, according to the British Hospitality Association. The retail sector employs some 2.9 million people across 208,000 firms.

Economic contraction worst in 41 years

Official figures showed on Tuesday the UK economy contracted an annualised 2.2 per cent in the first three months of the year.

The Office for National Statistics said it was the joint largest fall since 1979, and this barely covered the coronavirus crisis as lockdown was brought in towards the end of March.

Recent ONS figures showed the economy plummeted by 20.4 per cent in April – the largest drop in a single month since records began.

Source: inews