One in seven UK businesses in fear of collapse, survey shows
One in seven businesses in Britain was teetering on the brink of collapse even before the new lockdown in England came into force at the start of November, the latest official snapshot of trading conditions has revealed.
The regular update from the Office for National Statistics showed that one in seven firms polled during the last two weeks of October said they had low confidence or no confidence that they would survive the next few months.
Sunak’s changes to job protection schemes
The chancellor announces the “winter economy plan” to replace the job retention scheme (JRS), which was introduced in March and covered 80% of the wages of temporarily laid-off workers. Commonly known as the furlough scheme, at one point the JRS supported more than 9 million employees.
Rishi Sunak says it will be replaced by a German-style wage subsidy programme to cover two-thirds of wages for staff working shorter than usual hours. Known as the job support scheme (JSS), it offers to cover 33% of pay and employers would contribute 33%. It was designed to replace the JRS from 1 November.
Sunak also announced an extension in the self-employed income support scheme (Seiss), offering to cover 20% of average monthly profits between November and January.
Sunak announces additional support for businesses forced to close their doors. The furlough replacement becomes a two-pronged system: JSS: open and JSS: closed. The latter is designed to pay 67% of wages without employer contributions. Bigger cash grants are also announced for businesses required to close.
Sunak is again forced to tweak his plan. Amid rising pressure from rebellious northern Tory MPs and a rapidly deteriorating economic outlook, the chancellor drastically cuts the level of employer contribution on the JSS: Open to 5%, from 33% previously.
He also launches new grants scheme for businesses hit by local lockdowns, with cheques worth up to £3,000 a month made available. He also doubles the level of support on Seiss to 40% of trading profits.
Boris Johnson’s decision to launch a four-week lockdown in England comes with an extension of furlough UK-wide to cover the period. It is announced just five hours before furlough is due to end.
Sunak moves to give self-employed workers similar support, doubling the support to 80% of trading profits – the same level as it had been in the first lockdown. He also extends the deadline for state-backed business loans until 31 January.
The chancellor extends the furlough scheme until 31 March, covering 80% of workers’ wages. Support for the self-employed is also increased from November to January to a similar level.
Economists are predicting that the economy will take a significant hit from the tougher restrictions imposed to slow the spread of the Covid-19 virus, but the ONS figures suggest that many companies were already struggling.
Pessimism was most apparent among hotels and restaurants where a third (34%) of businesses said they would struggle to make it through to the New Year.
The ONS reported that by the end of October – the date when the government’s furlough scheme was originally due to end – 9% of workers, about 3 million people, still had their wages subsidised by the state.
In the arts, entertainment and recreation sector – much of which remained closed even as restrictions were lifted elsewhere during the summer – 34% of the workforce remained furloughed.
Rishi Sunak, the chancellor, announced earlier this month that the furlough would be extended until at least March, with workers paid 80% of their wages, but the ONS evidence on a possible wave of business failures suggests unemployment will continue to rise through the winter.
Data from the ONS covering the period up until the middle of October showed the impact of the new English lockdown on the economy.
The ONS said footfall among shoppers was 44% of the level seen in November 2019, while traffic on the roads was 22% down on its pre-crisis levels in February.
Meanwhile, the number of adults shopping for items other than food and medicine dropped to 10% – the lowest level since June when non-essential stores were reopened after the first lockdown.
Source: Read Full Article