Boris Johnson hinted on Monday that social-distancing restrictions will come to an end this summer as the UK prime minister confirmed the next stage of lockdown easing in England.

From May 17, pubs and restaurants will reopen for indoor service and up to six people from two households will be able to meet inside. Up to 30 people will also be allowed to gather outdoors. Museums, theatres, cinemas and children’s indoor play areas will also reopen and overnight stays will be permitted again.

The prime minister’s optimism, however, was cautioned by a rise in cases of the Covid-19 variant first identified in India, known by scientists as B. 1.617.2, which was classified last week as a variant of concern by UK health officials.

Johnson described the next stage of easing as “the single biggest step on our road map” and said the new freedoms would “allow us to do many of the things we have yearned to do for a long time”.

But he warned that “this doesn’t mean we can suddenly throw caution to the winds . . . we only have to look at the very sad situation in other countries to see the lethal potential of this virus and we must continue to fight the spread of variants here in the UK.”

From next Monday, families will be able to greet each other by hugging, although social-distancing requirements will remain in workplaces, shops and other public spaces. The government is conducting a review into the guidelines that will conclude by the end of May.

But, speaking at a Downing Street press conference, Johnson offered the biggest indication yet that social distancing will come to an end this summer.

“It looks to me as though we may be able to dispense with the one metre plus rule,” he said, adding that “clearly people are going to want to exercise their own judgment and own discretion for a long while to come.”

Kate Nicholls, head of UKHospitality, said capacity restrictions and social distancing meant that the majority of businesses would be unable to turn a profit until the restrictions were fully lifted.

“This is a psychological rather than economic reopening,” she said. She added that pubs and restaurants had only been profitable for one week when they were able to reopen in the period between lockdowns last year.

“Inside opening with restrictions is still not enough to secure the survival of pubs. We need them to be fully reopened without any restrictions at all from June 21 to survive and trade viably,” said Emma McClarkin, chief executive of the British Beer & Pub Association.

Chris Whitty, England’s chief medical officer, said there was “reason to be very careful about” the B. 1.617.2 variant, which he described as “highly transmissible” but added there was no evidence it would escape vaccination.

“This is actually spreading from very small amounts but it is beginning to spread in certain parts of the country and we need to keep quite a close eye on this,” he said.

Health officials last week said cases of the variant had increased from 202 to 520, with the highest concentration in London and north-west England.

Whitty said there was no expectation it would impact the lockdown easing timetable, but the government would monitor the variant carefully. “What we know with all the variants is that things can come out of the blue sky — you’re not expecting it and then it can happen.” He added that “we don’t know whether this will cause significant problems in the autumn”.

Although the prime minister has insisted England is on an “irreversible” path out of its third nationwide lockdown, he has not completely ruled out further restrictions if the virus spreads out of control in the future.

The announcement of the further loosening of restrictions came on the same day that scientists downgraded the UK’s Covid-19 alert status from level four to level three as the vaccination rollout takes effect and infections reduce.

Johnson announced that deaths were at their lowest level since July last year. Ministers will make a further announcement later this month on whether vaccine certification would be required after restrictions are removed.