The spread of the Omicron variant left many UK companies nursing a drop in sales in December, but there are signs the economy is picking up again this month.
In December 2021, a net 6 per cent of firms reported decreasing turnover compared to the previous month, according to the latest official figures.
That’s the highest proportion reporting a fall in monthly turnover since April 2020, when the first Covid lockdown hit the economy.
Empty seats and tables outside a bar in Covent Garden, London, on 21 December
The Office for National Statistics said that economic surveys show average company turnovers fell 1.4 per cent between late November 2021, when Omicron emerged, and early January.
Despite no official restrictions being imposed in the UK over the festive period, people stayed away from shops, restaurants and bars last month amid concerns over the spread of Omicron.
Primark today announced the cut of 400 jobs as it reported a hit to sales, which fell 10 per cent in the 16 weeks to January 8 compared to two years ago.
Similarly, Revolution Bars reported a 23 per cent fall in like-for-like sales in the last six weeks of 2021 compared to the same period in 2019, as the spread of Omicron triggered a flurry of cancellations of office parties.
‘Sales over the Christmas period were impacted by the move to ‘Plan B’ including the return to the ‘Work From Home’ instruction, implementation of Vaccine Passports for late night bars and government messaging which unhelpfully encouraged the limiting of social interactions,’ the company said today.
On top of concerns over Omicron, shoppers increasingly felt a squeeze on their finances as inflation rose to a 30-year high in December.
Consumer price inflation came in at a higher-than-expected 5.4 per cent in December, from 5.2 per cent in November, figures showed yesterday.
Two thirds, or 66 per cent, of UK households have reported that the cost of living has jumped last month, with rising food prices the biggest culprit, followed by energy and fuel bills, the ONS said.
Average company turnovers fell 1.4% between late November 2021 and early January
Jackie Mulligan, founder of the local shopping platform, Shopappy, said it was ‘a panoply of pain’ for businesses.
‘The move to Plan B holed many businesses under the waterline, just when they needed a festive lift.’
She added: ‘Inflation at a 30-year high is hitting small high street businesses from all angles.
‘Customers have less to spend, raw materials are costing more, supply chains are being squeezed, interest rates are on the up and the cost to heat their premises is skyrocketing.’
Despite the gloom, there were signs that the impact of Omicron on the economy was easing in January, as infections started to drop off from record levels.
Restaurant bookings increased by 5 per cent in the week to 17 January, with cities like London and Manchester recording a 6 per cent and 19 per cent increase respectively, according to OpenTable data cited by the ONS.
Transactions at Pret a Manger stores, which are considered a bellwether for the hospitality industry, jumped 16 per cent in the week to 13 January.
However, at 72 per cent of the average levels in January 2020, transactions are still ‘notably’ below levels in the four months before Christmas.
The overall number of people visiting shops in the UK also increased by 2 per cent in the week to 15 January, after three consecutive weeks of declines, the ONS said, citing figures from Springboard.
Despite the increase, footfall remains at 79 per cent of the level seen in the same week in 2019.