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SMEs fear job losses after end of furlough

Nick Bairstow

One in every three owner-managed businesses in the UK is planning to make redundancies now the safety net of furlough has been removed, according to a new survey by top 15 accountancy firm Moore UK.

Its quarterly survey of owner-managed businesses shows that those businesses planning to make redundancies are on average considering shedding 45 per cent of their workforce over the next six months.

Nick Bairstow, managing partner at Moore East Midlands, says that while a wave of redundancies did not materialise at the end of furlough on September 30, many smaller businesses are now waiting to see whether lay-offs become necessary over the coming months.

“The UK is far from out of the woods when it comes to redundancies,” Mr Bairstow said. “It is surprising to see so many businesses are considering reducing staffing numbers so substantially. Policymakers should be careful not to assume that the economy is back in rude health.”

No smaller business wants to lay off staff if it can be avoided, Mr Bairstow added.

“It seems like many are still waiting to see if they need to press that button. Their cash flow might allow them to keep their full workforces employed for now but they have plans in place to quickly make redundancies if they need to.”

Almost half of SMEs plan to raise prices, with supply chain disruption the key driver. Moore’s survey also shows that 49pc expect to have to increase their prices over the next six months, with six in ten citing disruption to their supply chain as the main reason for doing so.

Mr Bairstow said: “The effects of supply chain disruption because of Brexit and Covid have been felt keenly by a lot of smaller businesses. These issues are now endemic – a lack of logistics capacity and bottlenecks in ports around the world are driving up the cost of the goods they buy.

“Price increases are the only response they have.”

Unfortunately, price increases are likely only to add to pressure on inflation, Mr Bairstow said.

Price increases are the result of higher staffing costs for 38pc of those surveyed, while 33pc ascribe it to changes in the VAT treatment of overseas goods since Brexit.

The biggest challenges facing owner-managed businesses in the next six months are securing new business (37pc) and supply chain pressures (34pc). Then comes recruiting and retaining staff (27pc), taxation and reducing carbon emissions (both 21pc).

Find out more at www.moore.co.uk

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