A third of owner-managed businesses in the UK are planning to make redundancies now that the safety net of furlough has been removed, an accountancy firm has found.
Moore UK’s quarterly survey of 422 owner-managed businesses in the UK showed that those planning to make redundancies are on average considering cutting 45 per cent of their workforces over the next six months.
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Owner-managed businesses in London are more likely than those in any other part of the UK to be planning redundancies, with 42 per cent considering laying off staff.
Moore UK said that this likely reflects the effects of Covid on the finances of restaurants, hotels and pubs, which make up a significant part of London’s economy.
Almost half (49 per cent) of businesses expect to have to increase the prices they charge over the next six months and 59 per cent of these said the main reason is disruption to their supply chains.
38 per cent of businesses say that increased staffing costs have been the main contributor to them increasing their prices and a third put it down to changes in the VAT treatment of overseas goods since Brexit.
34 per cent of owner-managed businesses also said that supply chain pressures are among the biggest challenges they are facing over the next six months.
This was followed by recruiting and retaining staff (27 per cent), taxation (21 per cent) and reducing carbon emissions (21 per cent) and only slightly lower than securing new business (37 per cent).
“The UK is far from out of the woods when it comes to redundancies,” said Maureen Penfold, chair of Moore UK.
“It’s surprising to see so many businesses are considering reducing staffing numbers so substantially. Policymakers should be careful not to assume that the economy is back in rude health.
“No smaller business wants to lay off staff if it can be avoided and it seems like many are still waiting to see if they need to press that button.
“Their cashflow might allow them to keep their full workforces employed for now but they have plans in place to quickly make redundancies if they need to.
“The effects of supply chain disruption because of Brexit and Covid have been felt keenly by a lot of smaller businesses.
“These issues are now endemic – a lack of logistics capacity and bottlenecks in ports around the world are driving up the cost of the goods they buy. Price increases are the only response they have.
“Unfortunately, that is likely to continue to increase inflationary pressure.”