Covid Scotland: Fears Omicron ‘could be terminal’ for some Scottish food and drink businesses

The impact of the Omicron variant could be "terminal" for some Scottish food and drink businesses, it has been warned.

James Withers, chief executive of Scotland Food & Drink, said there was a “real fear” that firms supplying the hospitality sector could go bust.

It comes amid widespread concerns over the spread of the new variant, with 1,111 confirmed cases in Scotland since the end of last month.

Picture: Tim Goode/PA

Nicola Sturgeon previously announced a £100 million support package for businesses following renewed advice for Scots to cut down on social interactions.

This included £66m for the hospitality sector and £8m for the food and drink supply chain.

But the First Minister admitted this would not "fully compensate for the impact of Omicron" and called on the UK Treasury to use its borrowing powers to do more.

Mr Withers said many businesses will feel as if they are being hit by another lockdown, but without the same level of support.

He told The Scotsman: "Things have deteriorated incredibly quickly.

"I think from a mental health point of view, I think it's devastating for a lot of people.

"And from an economic health point of view, it could be terminal for some.

"If you're a food and drink business, you often will have a mix of different customers.

"Supermarket trade, trade in the shops is going to be OK – that will still be strong this Christmas.

"But if you're supplying to bars, hotels and restaurants, even the travel industry, it's pretty devastating."

He added: "The food and drink industry has been incredibly resilient, but this is now the second Christmas that will be lost for some."

Mr Withers said the support announced in Scotland was welcome, but would not “scratch the surface on the losses of some businesses”.

He said: "I had one business last week that had about £140,000 worth of business just wiped out.

"And these are relatively small businesses for whom Christmas might be half of income for the year."

Mr Withers said firms would need to see "the kind of business support that was there last time" from the UK Government if there is a further lockdown, including furlough.

Kate Nicholls, chief executive of UKHospitality, said: “We know from previous lockdowns that it causes venues to haemorrhage cash. It costs £10,000 to close each site and a subsequent £10,000 per month on overheads, and that was with full furlough and rate relief."

She said trading levels were so poor “the need for proportionate Government support is already acute, and urgently necessary if businesses, jobs and livelihoods are to be secured”.

A spokesman for the UK Treasury said: “The UK Government’s £400 billion Covid support package will continue to help businesses well into spring next year and, of course, we will continue to respond proportionately to the changing path of the virus and we have just made £440m of additional funding available to the Scottish Government to tackle Covid-19.

“To keep safeguarding our economic recovery and the lives and livelihoods of the British people, our priority is now to make sure everyone has the opportunity to ‘get boosted now’.

“We will continue to work with the Scottish Government in the weeks and months ahead in the face of this serious health crisis.”