Only businesses such as pubs in tier three - or very high risk - areas will have to close under new rules.
But those in the industry in tier two areas such as South and West Yorkshire have said they would be better off closed as more generous Government support is only available under the more severe restrictions.
Mark and Sona Young own Sela Bar in Leeds and said businesses in city centres had already been decimated by the 10pm curfew and people working from home.
The couple said they would feel more secure had Leeds been placed into tier three, despite having a small handful of staff to pay.
Mrs Young said: “Businesses are lucky if they are taking 50 per cent of what they were taking this time last year.
“We’re in a position where, financially, we would be better off to be closed than in the tier we’re in here in Leeds.”
Former Leeds MP Greg Mulholland, from the Campaign for Pubs, said: “Pubs already are saying they wished they were in tier three, because they simply can’t stay open with these restrictions. Yet there is no support available for them.”
Chancellor Rishi Sunak said yesterday help was available under the job support scheme but Alec Shelbrooke, Tory MP for Elmet and Rothwell, said in the Commons today: “Can I implore [Chief Secretary to the Treasury Stephen Barclay] to extend the £3,000 grant to all hospitality in tier two and tier three regardless as to whether they are told to close as the industry is dying because people are trying to do the right thing and not mix.
“Chief Secretary, the industry is open in name only – please look at extending the available help before this industry is destroyed.”
Fellow Conservative Julian Sturdy, York Outer MP, added: “UK Hospitality reports trade down 40-60 per cent with a ban on indoor mixing of households.
“So can I add my name to the calls from other colleagues for (Mr Barclay) to commit to urgently reviewing what targeted support could be provided for those enterprises stuck in this tier two, who as it stands, receive very little specific help but will still suffer huge losses of trade from additional restrictions that come with tier two and ultimately are going to really struggle to stay open.”
Mr Barclay replied: “Well I hear the concerns from (Mr Shelbrooke) but there is a balance that needs to be struck between the comprehensive nature and the fiscal cost of the range of packages that we have put in place and the measures that we take in terms of controlling the virus.”
South and West Yorkshire will go into tier two restrictions from tomorrow, which means a ban on households mixing indoors.
But council leaders in Leeds said today that the city is on a Government “watchlist” and could be placed under the highest coronavirus alert level, or tier three, as they enter further negotiations.
During a media briefing, Leeds City Council leaders said the current coronavirus rate is 422 cases per 100,000 people, with cases rising across the city and the number of positive cases in hospitals doubling in the last week.
Council chief executive Tom Riordan said: “This is a really pivotal moment for us again and there is a prospect that we could go into tier three.
“What we’ve got to do is make sure we are doing everything that we can, collectively and individually, to make sure that we are getting on top of the virus, and we also expect, from what the Government has said, that we will have very much an equal conversation with them about what needs to happen and when.
“At the moment, the judgment has been that we should go into tier two, and we support that, but the data changes every day and we need to just look at the epidemiology as well and see where the virus is spreading in settings and whether the extra restrictions in tier three are justified and also the economic impact of this, which is another factor we are very concerned about.
“We know that not just hospitality but retail businesses are really struggling, freelancers, the cultural and creative sector, people who haven’t had any support yet through this period and have been massively worried and continue to be, so we’d like to talk to the Government about a package of support that can really help get us through this next phase because we know there are some fantastic businesses that have been around for many years who are the lifeblood of Leeds, who are at risk, and we need to get this right for them, as well as balancing all the public health elements as well.”
Judith Blake, leader of the council, added: “At the moment, we’re still in discussions with the Government and we need to fully understand the regulations and what it is they are offering us in terms of support.
“All of the areas that were in discussions with Number 10 since the announcement last week have been told, with the exception of Liverpool City Region, that we are going into tier two, but we are on what they would describe as a watchlist and we will have further discussions this week.
“I think the preference from Number 10 would be for more areas to go into tier three but we need to have a much better understanding of the full implications of moving into tier three, what impact that will have on the wider economy and, most importantly, how much will going into tier three help us to get the numbers down and to stop the spread of the infection.”
Sheffield City Region metro mayor and Barnsley Central Labour MP Dan Jarvis said areas under tier two restrictions were in "a perverse situation" where they would rather be in tier three in order to access the Government support.