One in four UK firms set to sack staff if furlough support ends - research

Business group calls on the government to extend financial support schemes beyond March and April

One in four UK firms expect to let staff go if the government stops its financial support in April, according to a survey by the British Chamber of Commerce (BCC).

Chancellor of the Exchequer Rishi Sunak gave an 11th-hour extension the Coronavirus Job Retention Scheme which was originally due to end in October but is now set to expire in April. The government's Coronavirus Business Loan Scheme (CLS) is also due to finish at the end of March.

The BCC has now called on Boris Johnson's government to set out a "clear roadmap" for reopening, advancing vaccination and extending key financial support measures for businesses through 2021.

"The last year has taken a heavy toll on businesses across the UK," stated BCC director general Dr Adam Marshall.

"With cash flow still the top concern, it is vital that the UK government keeps financial support going until firms can reopen and rebuild. Pulling the plug now would be a huge mistake, and would be akin to writing off the billions already spent helping firms to survive.

"Firms are desperate to start trading again so they can boost revenue and start thinking about the future. To do so they need to see a clear, evidence-based plan for reopening, and they need time to get back on their feet without unnecessary additional taxes, and the security of knowing that government will once again support them should we see additional restrictions imposed at any point."

Nearly 70 per cent of respondents to the survey reported that the furlough scheme was the most effective of the government's support packages, with business rates relief, VAT deferrals and VAT cuts for certain sectors of the economy also rated as very effective.

However, should these government support schemes end according to schedule, 25 per cent of those surveyed stated they would make staff redundant, while another quarter would reduce staff hours and 19 per cent would cancel or reduce investment or recruitment plans.

One in five B2C companies said the expiry of this support wouldn't impact their business, while 39 per cent of B2B firms said the schemes finishing would have an effect on their business.

"Support must remain in place for firms that need it until a full reopening of the economy is possible," Marshall added.

"With cashflow being a major challenge for many businesses, we can expect to see further redundancies or business failures should government support end prematurely.

"Alongside a clear roadmap for reopening, business confidence will also come from a commitment to further accelerate the vaccination programme and a wider workplace testing strategy that's accessible to businesses of all sizes."