A quarter of British businesses expect to fire staff if furlough is not extended beyond April, the British Chambers of Commerce said on Thursday.
Results from the latest BCC survey on the impact of coronavirus shows how lockdowns have pushed businesses to the brink.
Three in every five firms have seen revenue fall in the last three months, while almost a third say they will run out of cash in the next quarter of the year.
The BCC has called on the government to set out a clear roadmap for reopening and advancing vaccination plans, as well as extending financial support measures for businesses throughout 2021.
Almost 2 million people in the UK have not worked for more than six months during the Covid-19 pandemic, as the crisis triggered the risk of long-term economic damage.
The Resolution Foundation has reported that 1.9 million people were unemployed or on full furlough for more than six months in January.
While the UK’s economic outlook steadily improved in the wake of vaccination rollouts, the report warned that many workers remain concerned about their job security.
Redundancies are rising at the fastest rate on record and the Treasury’s independent economics forecaster expects unemployment to hit 2.6 million by June.
The report called on the chancellor, Rishi Sunak, to extend targeted sector support for industries hardest hit by the pandemic.