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One in three UK SMEs planning redundancies, survey finds

·2-min read
Owner-managed businesses in London are more likely than those in any other part of the UK to be planning redundancies, with 42% considering laying off staff. Photo: Getty Images
Owner-managed businesses in London are more likely than those in any other part of the UK to be planning redundancies, with 42% considering laying off staff. Photo: Getty Images

One in three UK small owner-managed businesses are planning to lay off workers now that the government's furlough scheme is over. And they’re considering shedding almost half (45%) of their workforce in the next six months.

This is according to a survey of 442 owner-managed businesses by accounting and advisory network network Moore UK.

Those that are in London are more likely than those in any other part of the UK to be planning redundancies, with 42% considering laying off staff.

The report said this reflects the effects of the pandemic on the finances of restaurants, hotels and pubs, which make up a significant part of London’s economy.

It added that while a wave of redundancies did not materialise at the end of furlough on 30 September , many businesses are now waiting to see whether layoffs become necessary over the coming months.

“The UK is far from out of the woods when it comes to redundancies,” said Maureen Penfold, Moore UK chair.

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“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 – especially taking into account how the new restrictions just implemented may further impact businesses.”

She said businesses’ cash flow might allow them to keep their full workforces employed for now but they have plans in place to quickly make redundancies should the need arise.

Moore’s survey also showed that 49% of respondents expect to have to increase the prices they charge over the next six months. 59% of those say that disruption to their supply chain is the main reason for doing so.

Over a third (38%) said increased staffing costs have been the main contributor, while 33% put it down to changes in the VAT treatment of overseas goods since Brexit.

“The effects of supply chain disruption because of Brexit and COVID have been felt keenly by a lot of businesses. These issues are now endemic,” said Penfold.

“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.”

She added that is likely to continue to increase inflationary pressure.

34% of owner-managed businesses said that supply chain pressures are among the biggest challenges they are facing over the next six months.

This ranks higher than recruiting and retaining staff (27%), taxation (21%) and reducing carbon emissions (21%) and only slightly lower than securing new business (37%).

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