U.K. Firms Plan to Cut 25% of Furloughed Workers in September

(Bloomberg) --

A quarter of furloughed workers in the U.K. are likely to lose their jobs when the government begins reducing the amount it pays out to those on the program in September, a poll of employers shows.

Prime Minister Boris Johnson is pushing ahead with reopening the economy, hoping to save as many jobs as possible. Fears about lasting economic damage from the pandemic remain high in the small business sector, with the majority saying it could take one to two years to get back to normal, according to the survey of 2,000 businesses on behalf of London-based lender MarketFinance Ltd.

The Bank of England is increasingly worried that U.K. job losses from Covid-19 will turn out worse than expected, threatening the economic recovery. More than 9 million people have been furloughed under the government’s Coronavirus Job Retention Scheme alone, and the total number of workers on the programs is higher than the central bank expected.

Working with banks and alternative lenders, the government’s support programs have provided 40 billion pounds ($50 billion) in emergency loans to 970,000 firms, according to industry group UK Finance.

Other findings in the survey include:

• Nine in 10 companies are still waiting to be paid for work performed before the virus hit the economy in March, and the lost cash flow may undermine efforts to rehire employees.
• About 45% of companies anticipate bringing back as many as half their furloughed staff in July.
• Companies are still waiting to be paid an average of 148,917 pounds on average for work delivered to customers before the lockdown in March.
• The poll of 2,000 U.K. companies that employ between 1 and 249 people was conducted from June 17 to June 20 by LM Research & Marketing Consultancy.

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