The end of furlough is set to induce a “significant recalibration of the jobs market” according to a restructuring expert.
Chris Newell, managing director at business advisory firm Quantuma predicts that, as the Coronavirus Job Retention Scheme has ended, businesses across the country face the prospect of “tough decisions” around redundancies in the coming weeks.
Newell told City A.M. this morning that job losses were expected across sectors throughout the country and following the impact of Covid-19 and the UK’s departure from the European Union, it will take time for the jobs market to reset.
He said: “There needs to be a significant recalibration of the jobs market. We have gone through a pandemic and Brexit, which has led to a significant change in the way people live their lives and it’s going to take a long time to even out.”
On the possibility of making job losses as furlough ends, Newell said businesses will have to make a decision “sooner rather than later” as additional costs begin to bite.
“What we’re looking at is that furlough is ending, and employment costs are going to impact businesses a lot more from next month. Business owners will be hoping and anticipating that their turnovers have increased to cover this and that can manage this balancing act,” he said.
“Several businesses will have to make tough decisions around redundancies and in most cases, it will have to be sooner rather than later. I would say quite a few job losses are expected to be made across a number of sectors.
“A lot of companies have also taken debt on to their balance sheets in the form of CBILS and BBLS and will need to start paying this back and swallow the additional costs.”
Newell added that businesses that had planned for the impending end of government support would be in a better position to avoid making cuts but “those that perhaps haven’t done their due diligence that will be facing difficult decisions in the weeks and months ahead.”
He said: “Those firms that have prepared well will have a greater understanding of where they are, have kept their forecasts up to date and will be able to take quick action if they need to, like seeking advice from professional advisers.”