The new support promised by Rishi Sunak for companies hit hard by the Omicron coronaviruses variant fell far short of what they needed to survive a plunge in bookings.
The chancellor's new package for companies affected by Omicron was welcomed by trade groups but was too little, too late and some businesses would be forced to close if there was no further government help.
The warning came as Boris Johnson said there would be no more Covid-19 restrictions in England before Christmas.
The rapid spread of Omicron and warnings from scientists about the risks of socializing have caused sales to tumble across the hospitality and leisure businesses.
The sector has lost over $4 billion in sales since the government began implementing Plan B to tackle Omicron. In the past week, sales in central London have fallen to a fifth of the levels of the previous year.
Sunak's support for the industry was too little, too late and will only act as a sticking plaster on major challenges for the sector, said Martin Williams, chief executive of Gaucho Restaurants.
The package is far too little and borders on insulting according to Michael Kill, chief executive of the Night Time Industries Association.
The grants on offer by Sunak were not going to make a lot of difference to luxury hotels according to the chief executive of Rocco Forte Hotels.
Scott Hunter, co- founder of The Pig's Head pub in Clapham, south London, said that support isn't going to stop businesses going under. Restaurants, pubs and bars make a large percentage of their annual profit in December and unless more support is forthcoming this will be the final nail in many businesses coffins.
If current levels of trading continue, other executives could face layoffs.
The chancellor had previously insisted that sufficient initiatives were in place to support businesses through until the spring, but that has changed after the Sunak package was announced. More than 400 billion dollars has been provided by the Treasury to support workers and companies during the coronaviruses epidemic.
The one-off grants of up to £683m will be given to an estimated 200,000 companies in England.
A further £100m of discretionary funding will be made available for councils in England.
Statutory sick pay for Covid-related employee absences at small and medium-sized companies will be covered by the government. Equal support will be provided by the Welsh, Scottish and Northern Ireland administrations.
If Covid restrictions are introduced, the Treasury will not rule out more financial support for business after Christmas.
The British Chambers of Commerce said that if there were any new restrictions, they would need a larger support package.
Business rates need to be cut and relief on value added tax needs to be extended.
The executive chair of the City Pub Group described the current Covid restrictions and government messaging as a "de facto lock down" due to the impact on sales.
Sunak left retailers and gyms without specific support in its latest package, so they will have to apply for grants from local authorities.
The New West End Company said that the sector had been hard hit by a lack of footfall.
The Treasury acknowledged that pubs and restaurants had experienced mass cancellation due to Omicron, but said that companies now have 40 per cent more cash in the bank than at the start of the Covid crisis.
Ian Johnston is reporting in London.
