Plan B ‘risks £4BILLION hit to economy EVERY month’: Covid curbs proposed to stem Omicron could cut 2% off GDP and force return of furlough scheme

  • New Covid restrictions could see taxpayers foot the bill for more emergency support, think tank warns
  • Institute of Economic Affairs says Plan B could ‘easily knock’ 2 per cent off the country’s economic output
  • Experts said Chancellor may need to launch more support schemes to help hard-hit sectors and firms
  • IEA calls for ‘much stronger evidence’ that the new variant is more deadly and not just more infectious 

New Covid restrictions to clamp down on the spread of the Omicron variant could cost the British economy £4billion a month and see taxpayers foot the bill for more emergency support, a think tank warned today.

The right-wing Institute of Economic Affairs (IEA) said Plan B measures being considered by the Government could ‘easily knock’ 2 per cent off the country’s economic output – and cautioned that Chancellor Rishi Sunak may need to launch more support schemes to help hard-hit sectors and firms, adding further to the UK debt pile.

The London-based IEA called for ‘much stronger evidence’ that the new variant sweeping across the UK is more deadly and not just more infectious before putting in place further measures. This comes after Prime Minister Boris Johnson said early indications suggest the Omicron variant was ‘more transmissible’ than the Delta strain. 

Meanwhile the Night Time Industries Association (NTIA) warned that Plan B restrictions, including vaccine passports for large events and work from home guidance, would have a ‘devastating impact’ on businesses.

And the Federation of Small Businesses (FSB) warned that new measures during the ‘crucial festive period will impact small businesses already beset by supply chain disruption, inflation and shortages. 

Downing Street sources insisted ‘no decisions have been made’ but there is mounting speculation that further rules could be imminent, with the Cabinet’s Covid-19 operations (Covid-O) committee meeting this afternoon. 

A graph shows gross domestic product (GDP) in Britain over the past 15 years against a baseline of 100, the level in 2019

The recovery in the services sector was the biggest contributor to growth in September, according to the latest official data


Boris Johnson (left) appealed for the public to focus on the threat from Omicron – with Plan B measures expected to be confirmed as early as this afternoon. But Keir Starmer (right) said the PM had lost the ‘moral authority’ to impose restrictions

Julian Jessop, economics fellow at the IEA, said: ‘Even without a full national lockdown, the additional Covid restrictions apparently being considered in Whitehall could easily knock 2 per cent off GDP (gross domestic product) – costing the UK economy £4billion a month – and force the taxpayer to stump up billions more to prevent a new wave of bankruptcies and job losses.

‘This is on top of all the social costs and harms to people’s wellbeing and liberties, as well as the risk of further disruption to children’s education.’

Tui could cut rest of its winter programme in light of Omicron spread

Holiday giant Tui said it hopes summer 2022 bookings will rebound near to levels seen before the pandemic as it revealed an annual loss of more than £2billion.

The group said it is close to breaking even in the final three months of its financial year, to September 30, with a quarterly underlying loss of £82.7million.

But the firm added it is reviewing whether to cut the remainder of its winter programme in light of the spread of the Omicron variant of coronavirus and a fourth wave of the pandemic.

It reported an annual group loss of £2.1 billion, against losses of £2.7 billion in 2019-20, as it continued to be hit hard by Covid-19 travel restrictions for much of the year.

Tui said the first quarter of the new financial year is 93 per cent booked, though it is still running 31 per cent below pre-pandemic levels. It hopes summer 2022 will see a bounce-back close to 2019 bookings, but stressed customers are continuing to book later and at short notice.

Tui Group chief executive Fritz Joussen said: ‘Tui’s operating business is back and has recovered significantly in the last financial quarter of 2021.’

But he added: ‘There will be flexibility in deciding whether to offer winter programme capacity at the lower end of the range depending on the so-called fourth corona wave and possible policy decisions with regard to the Omicron variant. Capacity plans are regularly reviewed and adjusted.’

Under the Government’s Plan B, people could be told to work from home to limit the spread of the virus. Covid vaccine passports may also be needed for events with crowds, such as football matches.

The NTIA trade body’s chief executive Michael Kill added: ‘The Government’s own report on the subject concluded that vaccine passports wouldn’t even have a significant impact on virus transmission.

‘You do, therefore, have to question the timing and rationale for this announcement.

‘Is this sound evidence-based public policy making, or is this an attempt to move the news agenda on from a damaging story about the Downing St Christmas party?

‘Nightclubs and bars must not be thrown under the bus for the Prime Minister to save his own skin.’ 

And Jace Tyrrell, chief executive of New West End Company in London, said: ‘While our top priority remains the safety and wellbeing of our customers and colleagues, and we fully support mandatory mask wearing in shops, a renewed ‘work from home’ order during the most important trading period of the year would be a hammer blow for our retail and leisure tenants. Many businesses have committed time and money in their Christmas plans in a bid to make up for last year’s losses – vital investment that they won’t be able to recoup.

‘In the event of further restrictions, the Government must provide immediate clarity on the implications of Plan B for the retail and hospitality industry, and whether additional financial support will be offered to struggling businesses. 

‘Our hope is that a balance can be struck between keeping everyone safe and supporting the high street in its time of need. Otherwise we risk yet another miserable Christmas for struggling businesses and their staff.’

The timing of the new measures is being viewed in suspicion in Westminster, coming as the Prime Minister was forced to apologise after footage emerged of senior aides joking about a Downing Street Christmas party during last December’s lockdown.

At Prime Minister’s Questions, senior Tory William Wragg challenged Mr Johnson about reports that a Cabinet meeting and press conference were planned ‘to initiate Covid winter Plan B’.

The chairman of the Commons Public Administration and Constitutional Affairs Committee told the Prime Minister: ‘Very few will be convinced by this diversionary tactic.’ 

A video emerged last night of No 10 officials joking about another lockdown-busting party. It shows Boris Johnson’s former press secretary Allegra Stratton giggling and laughing as she is asked about the event during a mock media conference 

The Prime Minister told him: ‘No decisions will be taken without consulting the Cabinet.’ 

The Government has so far insisted it is not time to activate its Plan B – the restrictions that would be brought in to prevent the NHS being overwhelmed this winter.

But Omicron may have changed those calculations in Downing Street, with Mr Johnson telling the Cabinet yesterday that ‘early indications were that it was more transmissible’ than the Delta strain.

FSB national chair Mike Cherry said: ‘New measures aimed at limiting the spread of Covid during the crucial festive period will impact small businesses already beset by supply chain disruption, inflation and shortages.

‘We urgently need clarity around Plan B. Equally, the Government should explain what conditions would move us back to Plan A, whilst also outlining what Plan C would involve and the support measures that will be launched should more stringent restrictions take effect. 

 

 

‘Plans to control the virus need to be matched by plans to protect the economy and livelihoods.

‘Fresh rules introduced in recent days have meant renewed hard times for a lot of businesses, not least those in events, tourism and travel, whilst suppliers to hard-hit sectors are still waiting on allocation of the £1.5billion business rates relief fund announced months ago.

‘Many small businesses have already spent thousands on making their premises safer for customers and staff since Covid struck. Amid a rise in abuse towards shop owners, and with small companies still cash-strapped, business owners simply don’t have the capacity to be enforcement officers for Plan B.

‘We’re urging the Government to swiftly clarify where it stands on new measures, its strategy for enforcement, and expectations of small firms.’

Restrictions could play a role in slowing the spread of the variant in order to allow more time for the booster jab vaccination campaign to progress. 

Sage member Professor Neil Ferguson, from Imperial College London, whose data was instrumental to the UK going into lockdown in March 2020, said the variant is concerning but it is still unknown what its impact will be on severe disease. 

He suggested people may be told to work from home in the near future as Omicron is spreading fast, with the variant set to take over from the Delta strain before Christmas. 

At Prime Minister’s Questions, Mr Johnson apologised after footage emerged of his then spokeswoman Allegra Stratton joking about a December 2020 party at a mock press conference just days after the alleged event.

He ordered an investigation by Cabinet Secretary Simon Case ‘to establish all the facts and to report back as soon as possible – and it goes without saying that if those rules were broken then there will be disciplinary action for all those involved’.

But he insisted again that he had been ‘repeatedly assured since these allegations emerged that there was no party and that no Covid rules were broken’.

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