Small firms fear 1.4m job cuts with­out help

Three fifths of po­si­tions un­der threat, with se­cond Covid wave likely to drag 15pc of busi­nesses un­der

The Daily Telegraph - Business - - Business - By Alan Tovey

BAT­TERED small busi­nesses will be forced to slash 1.4m jobs with­out de­ci­sive ac­tion by min­is­ters to res­cue the econ­omy, ac­cord­ing to re­search.

More than three fifths of small and medium firms have al­ready launched re­dun­dan­cies or are plan­ning to do so as they reel from the im­pact of the pan­demic, ac­cord­ing to a sur­vey by com­put­ing com­pany Sage. If a se­cond wave of coro­n­avirus strikes then 15pc of com­pa­nies ex­pect to go bust, while half of re­spon­dents fear they could go bust if rev­enue drops by a fifth be­tween now and Septem­ber as the eco­nomic car­nage con­tin­ues.

The bleak fig­ures are likely to spark alarm in White­hall and lead to calls for Rishi Su­nak, the Chan­cel­lor, to dole out bil­lions of pounds more in eco­nomic sup­port. Small and medium-sized busi­nesses are the back­bone of the econ­omy, ac­count­ing for 60pc of pri­vate sec­tor em­ploy­ment.

Man­age­ment culls are likely to ac­count for much of the job losses, the study found, with bosses’ po­si­tions most at risk in the com­ing months. Of the 2,000 firms ques­tioned, 65pc said man­age­ment jobs were most likely to be tar­geted be­cause of ex­ces­sive wage costs or over­staffing be­fore the pan­demic hit.

Some 79pc of busi­nesses do not ex­pect to be mak­ing the same prof­its as they did be­fore the pan­demic by the end of the year.

Firms wel­comed mea­sures brought in to pro­tect busi­nesses such as the tax­payer-funded fur­lough scheme, state-backed loans and grants, but now they say fur­ther ac­tion is needed.

Sabby Gill, Sage man­ag­ing di­rec­tor, called the find­ings of the re­port “gutwrench­ing”, with “thou­sands of in­di­vid­ual sto­ries of peo­ple whose liveli­hoods and pas­sions are un­der threat be­hind the stark statistics”.

But he added that busi­nesses were em­brac­ing the dig­i­tal revo­lu­tion as a re­sult of Covid, po­ten­tially push­ing pro­duc­tiv­ity higher with long-term ben­e­fits, as fewer staff were able to do more work on­line. Sage said that small firms could be en­cour­aged to in­vest in tech­nol­ogy with tax breaks and other sup­port.

The com­pany also called for the Gov­ern­ment to back new busi­ness cre­ation, boost train­ing and help com­pa­nies to grow their ex­ports.

Mean­while, events in­dus­try chiefs fear that 30,000 jobs will be lost with­out clear guid­ance on how and when busi­nesses can restart.

The Events In­dus­try Al­liance lobby group said that the econ­omy will suf­fer an £8bn hit if con­fer­ences and other gath­er­ings re­main banned all year.

It warned that 60pc of firms that sup­ply the in­dus­try will go bust with­out a rapid restart. Un­like most other busi­nesses, events firms have been given lit­tle idea of when they can re­turn to nor­mal.

Ex­hi­bi­tions will need eight to 12 weeks’ warning to restart, the trade body said.

It also warned that a lack of gov­ern­ment guid­ance was caus­ing a con­fi­dence cri­sis among the in­dus­try and its cus­tomers.

Chris Skeith, chief ex­ec­u­tive of the As­so­ci­a­tion of Event Or­gan­is­ers, said: “The ex­hi­bi­tions sec­tor is a vi­tal en­abler of eco­nomic ac­tiv­ity in al­most ev­ery sec­tor of the UK econ­omy.”

Sev­eral other coun­tries, in­clud­ing France and Ger­many, have al­ready an­nounced steps to re­open ex­hi­bi­tions.

Sage’s man­ag­ing di­rec­tor Sabby Gill called the find­ings of the re­port ‘gut-wrench­ing’

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