A shock poll of 2,000 businesses has found 25 percent are planning on cutting furloughed roles when Government support ends. With 9.1 million workers currently furloughed, this could translate to more than two million lost jobs. The MarketFinance Ltd poll also found a huge cash flow problem in the UK economy, with 9-in-10 comapanies still waiting to be paid for work completed before the lockdown.
Millions of jobs could be lost when furlough payments end
Prime Minister Boris Johnson is pressing ahead with his plan to reopen the economy in a bid to save as many jobs as possible – but the survey suggests it may be already too late for many.
Concerns about lasting economic damage from the pandemic are high in the small business sector, with most predicting it will take one to two years to get back to normal.
The Bank of England is increasingly concerned UK job losses from COVIC-19 could turn out to be even worse than initially feared, posing a grave threat to the economic recovery.
Chancellor Rishi Sunak
More than nine million people are currently furloughed under the government’s Coronavirus Job Retention Scheme alone, with the total number of workers on the programs much higher than expected.
Working with banks and alternative lenders, the government’s support programs have provided £40 billion in emergency loans to 970,000 firms, according to industry group UK Finance.
Chancellor Rishi Sunak has said the furlough scheme will be wound up by October.
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Businesses are facing a three-pronged assault on their finances
Anil Stocker, CEO at MarketFinance, commented: “The reopening of the UK’s high streets marked the first buoyant moment for UK businesses in months but it might well be the calm before the storm.”
“Businesses are facing a three-pronged assault on their finances.
“First up, its alarming that only half of their CBILS loans are being granted, then we learn that they have close to £150k in outstanding payments since the lockdown began, and now it’s likely that they will have to wait twice as long to get paid for new work they do whilst demand and economic activity normalises.
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Prime Minister Boris Johnson at yesterday’s coronavirus briefing
“Coupled with a very moderate outlook for trading conditions, ‘rent quarter day’ this week and uncertainty about their workforce; no doubt this will put further pressure on businesses.”
Mr Stocker added: “Given the continuing uncertainty around how the country returns to ‘business as usual’, I would urge business owners to look beyond their banks and seek advice as soon as possible from other lenders, business advisors and mentors.
“The earlier they do this, the wider the range of potential solutions they’ll have open to them.”
Lockdown restrictions were significantly eased yesterday
The survey reveals:
* Ninety percent of companies are still waiting to be paid for work performed before the virus shut down the economy in March
* About 45 percent of companies anticipate they will bring back up to half their furloughed staff in July.
* Companies are still waiting to be paid an average of £148,917 pounds on average for work undertaken for customers before the lockdown
LM Research & Marketing Consultancy surveyed 2,000 UK companies which employ between one and 249 people between June 17 to June 20.
The coronavirus pandemic effectively shut down the UK economy in March
Meanwhile top medics have warned local flare-ups of COVID-19 are likely, with a second wave is a real risk.
An open letter in the British Medical Journal signed by among others Derek Alderson, president of the Royal College of Surgeons, Andrew Goddard, president of the Royal College of Physicians and Katherine Henderson, president of the Royal College of Emergency Medicine said: “While the future shape of the pandemic in the UK is hard to predict, the available evidence indicates that local flare-ups are increasingly likely and a second wave a real risk.
“Many elements of the infrastructure needed to contain the virus are beginning to be put in place, but substantial challenges remain.”
Speaking yesterday as he announced a significant easing of lockdown restrictions, Mr Johnson said: “The number of new infections is now declining by between two and four percent every day.
“This pandemic has inflicted permanent scars and we mourn everyone we have lost.
“While we remain vigilant, we do not believe there is currently a risk of a second peak of infections that might overwhelm the NHS.”