One in 10 businesses have admitted they are at risk of insolvency due to the pandemic.
The figure is revealed in the latest business impact of coronavirus survey from the Office for National Statistics, which shows 10 per cent said their enterprise is at “moderate risk of insolvency” and one per cent put the risk at “severe”.
The survey also found that 12 per cent of the workforce remain on furlough leave, with 67 per cent of furloughed employees receiving top-ups to their pay.
Almost a quarter, 23 per cent, said turnover has decreased by up to 20 per cent, rising to 50 per cent among 17 per cent of respondents.
More worryingly for firms and their staff, half said they have paused trading as they don’t have enough cash to last six months, and 11 per said they have none.
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Jack Izzard, director of The Great British Bounce Back, a community of small and micro businesses helping promote firms to fight back against the economic impact of Covid-19, said the government has failed to provide support “of any kind to a significant percentage” of its members.
“The UK economy is running on fumes,” he said.
“Many of our members have pivoted and adapted as best they can but the lack of financial support they have received is an abject failure of government.”
Sarah Coles, personal finance analyst for investment platform Hargreaves Lansdown, said the situation was different to the 2008 financial crisis as it is small businesses and their staff needing support rather than banks needing a bailout.
“It’s not a question of liquidity, because the Bank of England was on top of this from the outset – slashing rates and pouring cheap money into the system,” she said.
“Instead, it’s a question of businesses not being able to make enough money to pay the bills.
“It means the government is going to find a solution far harder too, because while during the financial crisis, it could bail out a few of the biggest banks, the businesses in real trouble this time are small and medium-sized firms.
“Tens of thousands of them are facing difficulties, and it’s far harder to find a way to rescue them all.”