More than half of all invoices from British restaurants, bars, and hotels aren’t being paid, as newly released data shows the terrible toll the coronavirus pandemic continues to wreak across Europe.
In the U.K., businesses in the hospitality sector remain shuttered by law, despite gradual easing of restrictions in other parts of the economy. The British government has said the earliest such companies might be able to open their doors is July 1, depending on infection rates.
Even then, the businesses will have to implement social distancing measures. The new figures raise doubts about how many of these businesses will ultimately survive.
Kate Nicholls, the chief executive officer of industry trade association UKHospitality, has recently praised the U.K. Government’s decision to extend its job retention and furlough payment programs. But she has pressed the government to provide hospitality businesses more help to cover a mounting backlog of debt, including rent and other unpaid bills.
Without such help, she warned that “a very difficult spring would become a disastrous summer” for the sector.
Autos, agriculture, and manufacturing
The data also points to deep trouble in the British auto sector, with car dealerships and repair garages seeing an 80% increase in the number of unpaid bills since the COVID-19 pandemic began. Car dealerships had been shuttered by British lockdown rules but were allowed to reopen this week.
Other sectors experiencing big jumps in delinquent invoices include agriculture, a worrying sign for the U.K.’s food security, and industrial manufacturing. In both cases the number of unpaid bills has climbed more than 50% since the World Health Organization declared a pandemic on March 11.
The stark new figures come from Sidetrade, a Paris-based software company that helps businesses with customer engagement and cash management. They back up a string of bleak reports this week. In a survey conducted by the Office of National Statistics, 42% of businesses said they had less than six months of cash reserves remaining, and fully 79% had applied for government help to pay workers’ salaries.
The British auto sector has experienced some of its worst months in history, with just 4,321 new cars sold in April and 20,247 sold in May, according to figures from the Society of Motor Manufacturers and Traders (SMMT). Those sales levels are more than 90% lower than the same months in 2019.
Unsurprisingly, both auto manufacturers and dealerships are shedding jobs. Luxury carmaker Aston Martin, which had been struggling even before the coronavirus, said Thursday that it will lay off 500 staffers, while auto dealership group Lookers announced a restructuring that might see as many as 1,500 job losses.
“This week’s reopening of dealerships is a pivotal moment for the entire industry and the thousands of people whose jobs depend on it,” Mike Hawes, the chief executive officer of the SMMT, said in a statement.
The Sidetrade numbers did offer a ray of hope that the easing of restrictions in the U.K. And elsewhere in Europe is enabling at least some cash to flow back to businesses. While about 42% of invoices across the U.K., France, Belgium, Spain, Italy, and the Netherlands were more than 10 days past due on May 23, the latest figure available, this is down from a high of 59% on May 2. (And much improved from when Coins2Dayreported on Sidetrade’s numbers in late April.)
The U.K., which has not moved as far in reopening its economy as other European countries, remains in the worst shape of the economies tracked by Sidetrade, with more than 38% of all invoices overdue, although that is down from a high of 42%.
“The U.K. Has seen a slight improvement in customer-supplier relations. This is the first positive effect of lockdown exit,” Sidetrade said in a statement.
The few British industries that have had the least payment deterioration from the coronavirus pandemic are the health care and life sciences sector and construction. Both have seen the number of unpaid invoices rise just 7% during the pandemic, according to Sidetrade.
Italy and the Netherlands are in the best shape, with just about 18% of bills unpaid in both. France is the only country where late payments have not declined consistently since early May, according to the Sidetrade data. There, over 36.5% of invoices were delinquent as of May 23, up from 35% on May 2.