BCC Coronavirus Business Impact Tracker: Restart of the UK economy “still in first gear”

Flexible furlough and redundancies

Flexible furlough, which allows businesses to bring employees back part time, began on 1 July. 31% indicated they have furloughed staff on a part-time basis, while 56% of firms surveyed said they still have staff furloughed full time.

13% of respondents said they had made redundancies since the beginning of the crisis, with 33% saying they intended to over the next three months.

Redundancies were more likely in Business to Consumer businesses, which are experiencing the worst effects of a prolonged period of closure and reduced demand.

Changing business practices

Prior to the Prime Minister’s speech on 17 July encouraging more people to return to offices where they can, 62% of respondents expected some or all of their staff to be working remotely for the next 12 months. This increases to 71% for B2B, and falls to 53% for B2C firms.

Data from Indeed indicates that searches for remote work in the UK have more than doubled since the outbreak of Covid-19. When it comes to job postings explicitly mentioning remote working, the rate has increased from 3% before Covid-19 to 5% now.

Reducing the cost of employment

BCC and Indeed have called on government to act swiftly to reduce the overall cost of employment to protect business and preserve as many jobs as possible in the coming months.

The two organisations have called for an 18-month expansion of the Annual Investment Allowance from £4,000 to £20,000 and an increase the threshold for employer National Insurance Contributions from £8,788 to £12,500, which could save businesses around £500 per job.

Commenting on the findings, BCC Director General Adam Marshall said:

“Our findings demonstrate that the UK’s economic restart is still very much in first gear. Businesses are grappling with reduced customer demand, an on-going cash crunch, and the potential for further lockdowns during an uncertain autumn and winter ahead. The Prime Minister’s encouragement to return to workplaces and further updates to business guidance will not be enough on their own.

“The time has come for the government to take radical steps to slash the tax burden around employment to help companies pay valued staff, rather than the Revenue. A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions, should both be in the Chancellor’s sights if he wants to help viable companies save jobs as the furlough scheme comes to an end.”

Jack Kennedy, economist at the global job site Indeed, said:

“The slowdown in consumer activity mirrors hiring activity in the UK. Today, there are 60% fewer job postings than there were before the outbreak of Covid-19 and so far there are few signs of a V-shaped recovery in vacancies.

“The furlough scheme has been an important lifeline to millions of people but the fear is there will be a sudden rise in unemployment after that umbilical cord has been severed. With one third of companies planning redundancies over the next three months, we will likely see a scramble for available roles as the labour market becomes heavily supplied with people looking for work.

“For jobseekers looking to bounce back into the workforce, many have turned to searching for remote work in a bid to secure jobs. However, not all jobs can be performed at home and a growing proportion of people are broadening their search by looking for roles farther afield than their local area.”