Economics bulletin 17 December

Date : 16 December 2021

Your overview of political and economic news with a focus on the food and consumer goods industry, featuring the latest developments and guidance on COVID-19, labour shortages and adapting to a new relationship with the EU.

COVID-19 absence

With a sharp increase in COVID-19 cases due to the new Omicron variant, it is highly likely that absence rates will increase in the coming weeks.

Businesses in England can introduce workplace mitigations to stem the increase in absence rates. These measures including ‘cohorting’, ‘fixed teams’, ventilation and screens or barriers to separate people who don’t normally mix.

Businesses can also reduce the risk by encouraging staff to get vaccinated and to receive the booster. See the section on ‘reducing contact for workers’ here for further details.

The government is requesting that businesses complete a daily labour absence survey.

Daily lateral flow tests vs self-isolation

Following the recent announcement by the Prime Minister of a move to Plan B of Covid-19 restrictions in England, people who are fully vaccinated but have had close contact with someone with COVID-19 can take rapid lateral flow test every day for 7 days. This replaces the previous requirement for a 10-day self-isolation period.

The aim is to reduce absence levels at work.  See the section on ‘People who need to self-isolate’ here for further details.

In Scotland, if someone is identified as a household contact of a positive COVID-19 case, they are then advised to self-isolate for 10 days irrespective of vaccination status, PCR test result and age. Businesses in the food industry can apply for critical workers exemptions in Scotland. See here for further details.

See here for further details on the requirement for self-isolation in Wales and Northern Ireland.

New COVID-19 restrictions in Wales

The First Minister will today announce further COVID-19 restrictions in Wales from 27 December. These include:

  • A 2-metre rule on social distancing in offices
  • A requirement for businesses to allow people to work from home wherever possible
  • Extra measures put in place in stores to protect customers such as one-way systems and physical barriers
  • All nightclubs to close

Up to £60m will be available to support businesses affected by the new restrictions.

Impact on UK hospitality

With England’s Chief Medical Officer advising people to limit social interactions with others in the run-up to Christmas due to the rising number of COVID-19 cases, there have been calls from the hospitality sector for financial support. This includes:

  • Extension of the discounted 12.5% VAT rate to stretch beyond its scheduled end in March 2022
  • For business rates due in the first quarter of next year to be deferred

The hospitality industry has estimated December takings will be down by 40%.

Rising inflation and interest rates

Annual “all items” inflation moved from +3.8% in October 2021 to +4.6% in November, which is the highest it has been since September 2008. With inflation returning to the economy much faster and much sooner than forecast, the Bank of England has announced an increase in interest rates from 0.1% to 0.25%.

See here for our viewpoint.

Pork butchers visa deadlines

800 pork butchers have until 31 December for visas from the existing allocation in the Seasonal Workers Pilot Scheme, allowing them to travel and work in the UK for a period of 6 months.  See here for more details.

EU-GB Imports from 1 January 2022

With around two weeks to go before the new year, businesses are encouraged to prepare for changes to the rules regarding imports from the EU to GB. See here for further details.

This follows publication of a revised version of the Border Operating Model. Please note that full customs declarations will be required from 1 January (although delayed payment may be possible).

See further details here including our opinion on the latest changes.

See the Key dates for UK-EU transition and support for businesses

See the guidance on trade with the UK as a business based in the EU.

Changes to import requirements from island of Ireland

The government has announced that sanitary and phytosanitary goods moving from the island of Ireland to Great Britain will continue to so on the basis that currently apply and will not, for now, be affected by changes detailed above. See here for further details.

More economic news and analysis

Sign up to our bulletin

Our round-up of the latest economic and political news, focused on FMCGs