The government is facing increasing calls to step in and support businesses affected by new “plan B” COVID measures – which include working from home guidance and vaccine passports for some venues.
Trade union GMB said it backed the reintroduction of a furlough scheme if the new measures threaten jobs.
Industry body UK Hospitality has said that anything short of full business rates relief, grants, rent protection and extended VAT reduction “would prove catastrophic”.
Meanwhile shares in the travel and leisure sector came under pressure in response to the government announcement while the pound remained close to one-year lows.
The new measures, designed to tackle the spread of the Omicron variant, mean mandatory face masks for theatres, cinemas and places of worship as well as vaccine passports for nightclubs and other venues with large crowds.
But retailers, pubs and restaurants also see the new rules as a major blow as, with the working from home guidance, they threaten to once again empty town and city centres.
Catherine McGuinness, policy chair of the City of London Corporation, said: “Christmas has been cancelled for many City shops, restaurants, pubs and other businesses that rely on footfall from workers in nearby offices.
“We will urge City businesses, workers and residents to follow the new rules.
“But we also ask the government to set out a clear roadmap to normality early in the new year and base all decisions on data.
“We need to find ways to live with the virus which allows the economy to prosper.”
Dan Shears, the GMB’s national health director, said: “If COVID restrictions lead to employers calling for help or laying off workers – GMB supports reintroduction of the furlough scheme, or something very like it.
“We need a clear plan from the Government around this so workers and businesses know what’s coming.
“As during previous waves of COVID, GMB will be calling for full sick pay for all workers who suffer COVID-related absence, so no one has to make a choice between the greater good and feeding their families.”
Michelle Ovens, founder of campaigning group Small Business Britain, said many firms that “have only just started on their tentative recovery” and need a winter trading boost to see them through to the new year would be hit.
“Small businesses urgently need support… and current interventions, such as cutting business rates by 50% for some sectors, do not go far enough,” she said.
“Until we can safely get businesses back up to full speed, we need rates to be completely cut, we need the recovery loan scheme to be extended, and we need as much leeway on cashflow as we can possibly get from organisations like HMRC on delaying tax bills and utility companies too.”
There were also more jitters on the stock markets – with some shares that had wobbled in advance of Wednesday’s announcement before recovering seeing renewed turbulence on Thursday.
In travel, British Airways owner International Airlines Group dipped more than 2% with easyJet seeing a similar fall and Dublin-listed Ryanair was off more than 1%.
The leisure sector was also affected with Cineworld down nearly 2%, Wagamama owner Restaurant Group off by almost 6% and Wetherspoons sliding by 2%.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “News that fresh social restrictions are being imposed in the UK… have put a brake on the rebound of not just travel stocks but bricks and mortar retailers, and hospitality firms.”
A Treasury spokesperson said the government was “acting early to help control the virus’s spread – while avoiding unduly damaging economic and social restrictions”.
“Our £400bn covid support package will continue to help businesses into spring next year and we will continue to respond proportionately to the changing path of the virus, as we have done since the start of the pandemic,” the spokesperson said.
The Treasury pointed to measures still in place until next year such as government-backed loans, protection from eviction and business rates relief and grants for some sectors.