LONDON (Reuters) – Two-thirds of small British companies have put at least some staff on temporary government-funded leave due to a drop in business caused by the coronavirus, a survey by the British Chambers of Commerce showed on Wednesday.
FILE PHOTO: A sign is seen on the front of a shop informing customers it is closed due to coronavirus in London, March 21, 2020. REUTERS/Hannah McKay/File Photo
Britain’s government has promised to pay firms 80% of their salary costs if they put staff on leave rather than fire them – a scheme which the country’s budget watchdog estimated could cost 42 billion pounds over the coming months.
This estimate from the Office for Budget Responsibility (OBR) on Tuesday assumed 30% of staff would be furloughed, and that coronavirus restrictions on business remained fully in place for three months and then were partially lifted.
Even with this help, the OBR said unemployment could still rise by around 2 million in the next few months, taking the rate to 10% of the workforce.
Finance minister Rishi Sunak said he was “deeply troubled” by the prospect, and never promised to stop all job losses.
The BCC survey showed a small drop in the share of companies planning to furlough more than three-quarters of their staff, which fell to 31% from 37% the week before.
Businesses also have ongoing cashflow worries, with 17% reporting less than a month’s worth of cash in reserve.
Sunak said on Tuesday firms could begin to apply next week for furlough funds, and that they would receive money by the end of the month. Banks were getting faster at approving government-guaranteed loans, he added.
The BCC said just 2% of the firms it surveyed between April 8 and April 10 had received these loans, compared with 9% who were still waiting for a reply or had been rejected.
Some 15% of firms had received other government grants – up from 7% the week before.
The BCC poll focused on businesses with fewer than 250 employees, three quarters in the services sector and a quarter in manufacturing.
Reporting by David Milliken; editing by Stephen Addison