UK to give airports aid after COVID-19 rules tightened

Britain’s government said on Sunday it would give financial aid to airports before the end of March, after the industry called for urgent support as tighter COVID-19 rules for international travellers start on Monday.

Aviation minister Robert Courts said the government would launch a new support programme this month.

“The Airport and Ground Operations Support Scheme will help airports reduce their costs and we will be aiming to provide grants before the end of this financial year,” he announced on social media, adding that more details would follow soon.

From 0400 GMT on Monday, all travellers to Britain must have a recent negative COVID-19 test and be prepared to quarantine at home for 10 days on arrival.

Britain’s current lockdowns ban most international travel, meaning that airline schedules are currently minimal. But the withdrawal of any quarantine-free travel will be a further blow for the industry.

The latest restrictions were prompted in part by a third wave of the disease that has caused record daily death tolls in Britain, as well as concern about a new coronavirus variant discovered in Brazil.

London’s second-largest airport, Gatwick, said the support would help preserve jobs at a time when it had suffered a large reduction in passenger numbers.

Karen Dee, chief executive of Britain’s Airport Operators Association, said before the announcement that the government needed to go beyond existing support that includes a temporary exemption from local property taxes.

Relief from regulatory, policing and air traffic control costs would help, she added.

Courts did not mention any support for airlines, which have benefited from general government furlough programmes but have received little direct assistance.

Tim Alderslade, chief executive of industry body Airlines UK, called for plans to relax travel rules by Easter, before the peak spring and summer holiday period.

“Airlines have been staying in business by taking on billions of pounds of debt which will need to be paid back,” he said.

Britain’s economy shrank in November as it went into a new lockdown, but the decline was smaller than expected as businesses adjusted to social distancing and schools remained open, making a double-dip recession less likely.

The 2.6% monthly decline in Friday’s official data was the first since April but less than half the average contraction forecast in a Reuters poll of economists. The scale was also far smaller than April’s 18.8% collapse during Britain’s first lockdown.

“Overall, the growing immunity to lockdowns suggests that the economy is not quite as sick as we thought,” said Paul Dales, chief UK economist at Capital Economics.

The world’s sixth-biggest economy shrank more than its peers in the first half of 2020 and is now 8.5% smaller than it was in February, before the start of the pandemic.

A third, stricter lockdown that began this month is likely to cause Britain’s economy to contract in the first quarter of 2021, when many businesses are facing post-Brexit barriers to trade with the European Union.

“It’s clear things will get harder before they get better and today’s figures highlight the scale of the challenge we face,” finance minister Rishi Sunak said.

But Britain’s roll-out of vaccines - which has been faster than elsewhere in Europe - was a reason to be hopeful, he added.

Several economists warned that Britain remained at risk of a renewed recession, with the economy likely to shrink in both the final quarter of 2020 and the first three months of 2021.

But others thought a contraction might be avoided in the fourth quarter because November’s restrictions were lifted in December.

BoE Governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed after the central bank ramped up its bond-buying programme to almost 900 billion pounds ($1.23 trillion) in November.

Friday’s data showed Britain’s economy in November was 8.9% smaller than a year earlier, compared with 6.8% smaller in October. In April, when many businesses closed temporarily, output was a record 25% below its year-ago level.

November’s downturn was led by services, where output fell 3.4% from October as pubs, restaurants, non-essential shops and many other consumer services had to shut. Manufacturing grew by 0.7% and construction by 1.9%.

Part of the scale of the damage to Britain’s economy in 2020 reflects a decision by the ONS to take account of disruption to routine medical care and schooling caused by COVID-19, an approach which not all countries’ statistics agencies have taken.