ONE IN THREE owner-managed businesses in the UK are planning to make redundancies now the safety net of furlough has been removed, says a new survey.
The quarterly survey of owner-managed businesses in the UK, published by accountancy practice Moore UK, shows that those businesses planning to make redundancies are on average considering shedding 45% of their workforces over the next six months.
Nick Bairstow, managing partner at Moore East Midlands, says that while a wave of redundancies did not materialise at the end of furlough on September 30, many smaller 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,” he said. “It is 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 cash flow 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 survey also found that almost half of SMEs plan to raise prices over the next six months, with supply chain disruption the key driver for 59%.
Mr Bairstow said: “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.”
38% of businesses say that increased staffing costs have been the main contributor to them increasing their prices, while 33% ascribe it to changes in the VAT treatment of overseas goods since Brexit.
34% of owner-managed businesses also say 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%).
Find out more at www.moore.co.uk