Two-thirds of all businesses across the UK currently trading have a “low to severe risk of insolvency”, according to the Office for National Statistics (ONS).
The latest Business Impact of Coronavirus Survey (BICS) from the ONS found that 64 per cent of businesses across all industries are at risk of insolvency, with 43 per cent of companies running on less than six months’ cash reserves.
The figure comes on top of the 14 per cent of all UK businesses that have already paused trading under local lockdown restrictions.
Businesses in the hospitality industry are at the highest risk of entering administration, with 17 per cent of all accommodation and food companies currently trading at “severe risk” of insolvency, according to the ONS.
Seven per cent of all pubs, restaurants and hotels in the UK have zero cash reserves, latest data showed.
A spokesperson for trade body UK Hospitality told City A.M: “There can be no doubt of the devastating impact that the government’s restrictions are having on hospitality and pub businesses across the UK.
“Without urgent sector-specific support for our industry, massive business failure is imminent and hundreds of thousands of jobs will be lost around Christmas from a sector that was in growth at the beginning of this year, as well as in the supply chain that supports them.”
It comes after more than two-thirds of businesses in the hospitality sector reported a slump in usual turnover for this time of year in the three weeks to 4 October, when the survey was conducted.
Key figures in the hospitality sector have called for further financial support, warning that the 10pm curfew, social distancing measures and tier restrictions will decimate the industry and cause wide-scale job losses.
Nine per cent of the entire UK workforce, and more than a quarter of the nation’s hospitality industry were still on partial or full furlough at the beginning of the month, according to the ONS.
The Trade Union Congress (TUC), which represents more than 5.5m workers across the UK, has warned the country will see a “tsunami” of job losses when the furlough scheme winds down on 31 October — in just three days’ time.
Figures up to the 4 October from the ONS showed a slight increase in the number of UK businesses resuming trading in October, with 86 per cent of businesses in the UK currently operating — compared to just 66 per cent in June.
However, the latest figures are likely to be much lower, after large swathes of the North of England, Scotland and the whole of Wales entered some form of local lockdown since the ONS survey was compiled.
Businesses in the arts and entertainment industry have taken the biggest hit from the pandemic, with 30 per cent of companies in the sector currently shuttered.
But the pandemic continues to weigh on those businesses that have reopened, with almost half of companies that have resumed trading experiencing a decrease in turnover compared to normal business at this time of year.
A government spokesperson told City A.M: “We understand the pressures businesses are currently under and have put in place one of the most comprehensive packages of business support in the world, worth more £200bn.
“We have also given businesses much-needed breathing space by extending measures put in place to protect them from insolvency.”
The spokesperson added: “Our plan for jobs will support businesses in the months ahead, and businesses required to close due to local lockdowns can claim £3,000 a month. On top of this firms can continue to access billions of loans and guarantees, cuts to VAT and business rate relief.”