Ending furlough scheme in June is ‘tantamount to economic suicide’

Ending the Government’s near-£50billion wage subsidy scheme in June is ‘tantamount to economic suicide’ as firms will be forced to make mass redundancies without further help, according to business leaders.

Just days after British Airways warned of 12,000 job cuts, business only expect to recover slowly as workers and consumers stay home and social distancing measures are put in place.

It means a lot of firms – particularly on the High Street and in travel and tourism – will be unable to afford to pay all their staff once the Coronavirus Jobs Retention Scheme ends in June.

They are currently able to send staff home on 80 per cent of their wages, which are covered by the Government up to £2,500 per month.

The Office for Budget Responsibility said it expects the furlough scheme to cost £49billion.

Business groups estimate that around a third of the 3m jobs in UK retail are in areas which are severely affected by the lockdown, with many shut down completely.

Most High Street firms have placed their staff on furlough while stores are closed.

Helen Dickinson, chief executive of the British Retail Consortium, told MP’s on the business committee: ‘The Government really mustn’t turn off the tap once restrictions are lifted at the end of June. We don’t have that cliff-edge while trading remains difficult.’

Andrew Goodacre, chief executive of the British Independent Retailers Association, said: ‘It’s impossible for shops to take all their staff back on if all their sales pre-crisis are not there. Unless there is an extension [to the scheme] it will result in redundancies.’

Vikas Shah, managing director of Swiscot Group, a textile supplier, said: ‘I think it would be tantamount to economic suicide for the Government to halt the furlough programme before businesses have had the chance to recover their trade. And for all businesses, including ours, that would be a catastrophic event.’