U.K. Businesses Expect to Cull Jobs Once Furlough Program Ends

(Bloomberg) -- Almost half of businesses taking part in the U.K. government’s coronavirus jobs program expect let go of furloughed staff when support ends in October.

The problem is more acute for medium-sized businesses, two-thirds of whom say they’ll have to cut jobs when the wage subsidies expire, according to polling by Opinium and the think tank Bright Blue. A quarter of businesses will struggle to increase their share of employee salaries between August and October, the report showed.

Over nine million people in the U.K. have been furloughed since the coronavirus lockdown started in March. To prevent a spike in unemployment and to ease the drop in consumer spending, the government has been paying 80% of salaries, with companies able to top it up to 100%.

The report highlights the challenge for Prime Minister Boris Johnson as the country emerges from lockdown. Chancellor of the Exchequer Rishi Sunak will outline to Parliament on Wednesday the next steps in the government’s plans to kick-start the economy.

The think tank joined the Confederation of British Industry in calling for additional measures to avoid economic scarring in the labor market.

“In the months ahead, they will have to effectively follow-up on current policies, to both contain the economic fallout from the crisis and to build the road to the recovery,” said Anvar Sarygulov, senior researcher at Bright Blue.

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