As the Guardian and many other outlets have reported this afternoon:
The Italian restaurant chain Prezzo has said it plans to close 46 outlets in the UK, putting 810 jobs at risk, in a sign of the struggles for the casual dining sector amid the cost of living crisis.
Announcing the news on Monday, the company blamed inflation, saying rising costs made it impossible for it to make a profit in some locations.
I feel sorry for all involved, including friends of one son who worked there at one time.
I am working hard not to say, 'I told you so'. When this crisis was developing, I said that the retail, hospitality and leisure sectors were most at risk as discretionary spending would be crushed by the total failure of the government to come to terms with the scale of the short-term issue they faced.
And I stress, I did mean short term: inflation was always going to be that because throughout history that is the way it has always been. After any serious outbreak of inflation reversion to the norm of low rates is always very rapid.
So what are we now seeing? Just as the end is in sight for many businesses, and inflation and key costs like fuel have the likelihood of coming down, the government has withdrawn support, not least on fuel for the rest of this year. What that means is that all that money spent on furlough, business support, energy price support and so on will now all be for nothing as jobs like those at Prezzo are lost.
When the discussion is had on economic mismanagement over the last few years this failure of the government to last the course on supporting businesses will be one of the biggest issues that history will note. And it is so stupid to throw away all that investment now.
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Being made redundant is no fun – 22 years on I still feel a tinge of resentment…. but I will get over in in another decade. However, many of these folk will experience extreme stress and hardship given the “racing certainty” that they will have few savings given the wage levels in hospitality.
I completely agree about the complete mismanagement of the economy over the last decade or more and this is one of the results.
But, I think there are some questions that arise. We know that we need to change our economy and that may well mean redeploying pizza chefs as health workers or installers of home insulation. How do we do this well?
We know how not to – the massive deindustrialisation of the 80s that blighted a generation of workers in certain areas is a case study in “what NOT to do”.
We also know “what TO do” from a macro perspective – in terms of interest rates, Green New Deal, MMT etc.. This blog has led the way on this.
Is it time to also think about micro policies that will support the shift from “pizza worker to health worker”?
Yes, in word.
And that means serious funding for retraining on full pay.
Policies to encourage take-up of employment in the personal care and health sector to take up the many thousands of vacancies have been proposed many times through various bodies over the years most of which have been ignored by this government. The solution must reside at least in part in increased pay, skills and training certification with thresholds for entry reflecting the physical and interpersonal care skills needed. Such people MUST be paid at least on a par with NHS terms including pension and strategies for status improvement implemented.
It’s not a one-off. When does a government realise it is failing, and that trickle-down does not work?
1. Crashed the economy
2. Highest interest rate in 32 years
3. Highest inflation rate in 40 years
4. Highest tax burden in 70 years.
5. Lowest Sterling/US Dollar rate in 50 years
6. Truss: “the most economical right-wing major party in the developed world” (Financial Times)
7. Cut taxes to the richest in society, but ignored:
8. Two million more food bank users
9. A broken NHS
10. Highest energy costs in Europe
11. Nearly all public sector workers on strike.
It realises, Ian. It just doesn’t care. Neoliberalism is quite simply socio-economic Darwinism. If you’re not well-off, it’s your own fault. That is the only creed of the current day Conservative Party.
> Neoliberalism is quite simply socio-economic Darwinism.
This neoliberal justification is *so* annoying, it’s a misrepresentation of Darwinism, where cooperation and mutualism are as much a part of the picture as competition.
> If you’re not well-off, it’s your own fault
And this is demonstrably untrue — it’s so much easier to be well-off if your family is wealthy, it comes down to *luck*, not fault.
I recall the debate on meat and it requires a multiple of the land area to produce a kilo of meat protein as it does to produce the same nutrition from flora. Likewise it takes considerably more energy to satisfy hunger making pizza in wood-fired or gas-fired ovens (those things have to run incredibly hot, even the electric ones) than other less energy intensive cuisines.
I note when researching this that the number of Indians in Ely has recently increased. For the sake of the planet we should hope the government has a policy to let these lower energy businesses displace those that use more.
I therefore think we should lament that most of the Prezzo chain is to remain operational and therefore the bulk of their staff would not be eligible for any fully paid training periods while upskilling to being health care workers.
You researched this?
But we had too many pizza places, for sure, and Prezzo wax always the most at risk.
But the balcony it had where you could have a pizza and watch peregrines and overlook the cathedral was good.
I too have been made redundant on a number of occasions due to changes in markets usually brought about by crises or some sort of fiscal mismanagement.
My worry is that the Tories – as well as other politicians – just see this as a normal everyday thing that has nothing to do with them – it just ‘markets’. And also, they expect markets to make those investments in people, not the state – at the same time everyone is raving about AI.
Nothing seems to make sense anymore – at least to my eyes.
They think it is constructive chaos
I’m sure there will be other pizza joints closing down. It’s a sort of Domino effect… and I arrived at that joke via thinking of the effects on local economies of all those incomes being taken out of them, and what that leads to. We’re looking at a viscous circle here, one created as a matter of deliberate government policy. How, I wonder, are the Tories going to explain away the oncoming tsunami of unemployment?
Incidentally, has anyone else seen the video on Twitter of Sunak’s cavalcade through central London today? There were outriders on bicycles, astonishingly, and squads of beefy red-faced coppers running alongside Sunak’s Men-In-Black style SUV. I’ve never seen anything like that on London streets. It appeared to be a failed attempt at looking Presidential, designed I imagine to impress the rubes back in what Sunak considers the important country, India. Disturbing.
Very
And utterly bizarre
I don’t have any inside knowledge about Prezzo, but it has always seemed to me that some of the fast food chains have been “skating on thin ice” chasing expansion rather than an economically sound business. Which means every now and then one fails.
On the other hand business failures of any sort can be an indication of tough economic conditions, and acquaintances in the hospitality business still say they are struggling. They don’t need handouts from government, they need an economic environment where enough people can afford meals out occasionally.
Having worked in the restaurant business in my early working years, my view about eating out is that it is being firmly supplanted by ‘eating in’ – where the food is increasingly being brought to people’s homes via the increased use of the internet and phones.
I’ve seen so many restaurants close down over the years but I also see how IT has the capacity to destroy jobs and disrupt sectors of employment. The way IT abuses music and and songwriters is a case in point.
Redundancy is horrible and I myself feel sorry for those as I myself have very little disposable income as much is being cut back on or outright cancelled in my work.
We are not out of the woods yet and Commercial real estate is predicted to be the next looming crisis as lease holders of offices may not renew or drop the amount of space considerably this in turn may leave the owners handing the keys to the banks upon defaults. the work from home chickens will come home to roost and although they may prefer not commuting it was a drastic change that will and already has had drastic consequences economically this is just the start right now.
I do hope their is a change of course though If you want to increae interst rates to create a wall hurdle to borrow then don’t attack the otherway at the same time with tax rises especially on sectors getting totally hammered and energy support dropped… Could see this a mile off.
last month very nearly 6000 insovencies only 500 shy of worst ever recorded in 2008. December January and February were bad too.
David Byrne says:
Could it be that the tories have accepted electoral defeat already and that they will be out of power for many years?
It is apparent that they have not been managing the economy for the common good, only focusing upon maximising their ‘value’ to global, corporate/financial actors in pursuit of cash. Their playbook illustrates the tactics:
-minimise regulation and enforcement action eg pollution prevention, employment protection etc
-enact legislation to control free speech and civil rights
-take no action on greedonomics which causes more inflation resulting in higher corporate profit, dividends and share buy backs
-raise interest rates to create more personal debt, unemployment and higher bank profits
-manipulation of the news media
-hand out honours and favours to friends and prospective future employers.
The list goes on.
–
Once upon a time people made their own sandwiches to eat in the workplace, now they pay through the nose for the commercial variety = bad economic move.
Once upon a time there was domestic science in schools, sadly only for the girls, where they learned how to cook – eating out is expensive and a lot of restaurants have horrendous hygiene scores = bad economic move.
Since the 60s it has been a deliberate plan (started in the USA) to deskill the general population, making them reliant on others for almost everything. Eg. I belong to a few audio forums, I modify hi-fi gear and a lot also produce from scratch, amps, speakers,DACS etc. They cost a fraction of the commercial equivalents and sound a lot better. As the years have gone by less and less do so. In the USA a lot of young people now don’t know how to wire up a plug. PSR rightly raises the issue about I/net music – it not only destroys incomes of musicians, it provides a mediocre listening experience. With video it sexualises music, most of which is crap compared to the past. In the 50s and 60s in the UK people would build their own homes. The self build was far better quality as well.
All service industries are parasitic – they don’t produce product/wealth, they consume it. It began in the 60s’ Thatcher and her cronies only ramped up this trend. The more self reliant the general population becomes the parasitic service industries will wither away and the UK may become like the Dutch and Germans who invest income for their future. The Dutch and Germans retire on 90% of their final salaries. When I worked in construction in the Netherlands towards the end of the 70s’ I received via contributions from myself and the employers vacation money of around £1200 p.a – nothing like that in the UK.
I would like to see all the ‘fast food’ joints closed down, home delivery, yes for the disabled. How much of the labour is provided by immigrants?
How about in the last year at school teaching these young people all about ‘money’ how not to get ripped off with crap insurance, mortgages, leasehold property, there’s a long list and providing a dossier they could take through life – a lot of parasites would be out of a job.
Why not provide properly built community centres where they can cook, make their own beers, socialise instead of ‘living’ lonely lives. Of course this has nothing to do with politics or religion, both forms of brainwashing.
Are pub companies going to ask their managers to stop people getting drunk – of course not. Are the likes of McDonalds/Burger King/kebab shops going to discourage eating too much crap – of course not. Will any political party move to eradicate nicotine addiction – the tobacco barons have them in their pockets.
So Prezzo is going bust – no tears shed here. When people become self reliant, they become confident, not easily conned. How many self reliant, confident people voted for Brexit?