Business balances getting back to work with fears of a second Covid spike

The hospitality sector would be hit even harder by a second lockdown, experts believe, with high profile businesses such as Carluccio’s and Chiquito already having collapsed. 

“There’s no easy answer,” said Alasdair Murdoch, chief executive of Burger King in the UK, who is focused on making sure the business has enough cash. 

“A second wave would be fairly disastrous for the economy – we’d just go back to where we are now. 

“Our ability to close under lockdown would be quicker because we’ve done it once before but it’s clearly not something we want to do on any level.”

Non-essential retailers such as clothing and electronics shops have already lost billions of pounds in sales and stock and might simply not be able to withstand another lockdown. 

Few of the big names could afford to stay shut for longer periods of time as many have had to borrow cash; the smaller players would go bust.  

Industry sources warned that under a second lockdown, many companies might simply insist that they be allowed to stay open, leading to clashes with government. 

In the meantime, retailers have been busy ordering protective screens for staff at the tills and floor stickers to guide shoppers. There are hopes they will be allowed to trade with the same social distancing measures in place as supermarkets. 

For the time being, large queues outside shops will become the norm, adding to the advantage of online retailers. “Online will have the better of things,” said Jonathan Pritchard and John Stevenson, retail analysts at broker Peel Hunt. 

Yet even they face challenges due to social distancing measures in warehouses, meaning fewer people to pack and ship items and cope with demand. 

In the manufacturing sector, major companies such as Jaguar and Vauxhall are nervously emerging from the wreckage to find out which of their suppliers are still standing. 

Many rely on supplies being delivered just a few hours before they are needed on assembly lines, having moved years ago to just-in-time manufacturing rather than costly stockpiles.

Yet such supply chains are complex and fragile, and many large manufacturers may need to find replacements for suppliers sunk by Covid-19. 

Having gone through this expense, a sudden hiatus which could see more suppliers collapse would be potentially disastrous.

Some companies with long supply chains or without the means to build up stocks are, therefore, holding-off starting work again until they are sure the worst is over. 

A second stoppage would also pile pressure on SME manufacturers already struggling with customers not paying their bills. 

The travel industry is still grappling with the economic shock from coronavirus, in particular, how it will pay back billions in customer refunds.

A number of airlines have proposed running flights with a number of empty middle seats, allowing social distancing to be implemented even if there is a second wave of Covid-19.

Not all carriers are supportive, however, with Ryanair boss Michael O’Leary calling such plans “idiotic”.

A full second lockdown – and the widespread grounding of services – could be disastrous for the already stretched finances of the aviation industry.

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