Two in five companies will cut jobs when the government’s job retention scheme comes to a close in the autumn, according to a report.
A poll by Bright Blue, a think tank, has found that 44 per cent of businesses using the government scheme intend to make redundancies when the support is withdrawn in October.
Under the scheme, the government has been paying 80 per cent of the salaries of workers on furlough since late March. The policy has been popular with businesses, with about a quarter of the workforce drawing on the support.
It has been credited with keeping unemployment low, but economists fear that the joblessness rate will soar when the scheme expires as many businesses will not be able to take back all their staff. Just over a third of businesses told Bright Blue that demand was unlikely to recover to pre-pandemic levels soon.
The Bank of England expects the unemployment rate to climb from below 4 per cent to 10 per cent. Economists fear that redundancies will start rising from next month, when companies have to start paying national insurance and pension contributions, representing 5 per cent of employment costs.
In a survey of more than 500 businesses, Bright Blue and Opinium Research found that almost a quarter were not confident of being meeting these obligations from August. Medium-sized businesses, with 50 to 249 employees, were the most worried, with 65 per cent saying they would cut jobs when the scheme ends in October.
