A third of UK SMEs are planning redundancies in the next six months according to a new survey. Half are also planning to raise their prices because of supply chain pressures.
Accountancy firm Moore UK polled 442 owner-managed UK businesses for its quarterly survey, which showed that 33% are planning to make redundancies now the safety net of furlough has been removed. Those businesses planning to make redundancies are on average considering shedding 45% of their workforces over the next six months.
Owner-managed businesses in London are more likely than those in any other part of the UK to be planning redundancies, with 42% considering laying off staff. Moore says that this likely reflects the effects of the pandemic on the finances of restaurants, hotels and pubs, which make up a significant part of London’s economy.
Maureen Penfold, chair of Moore UK, said that while a wave of redundancies did not materialise at the end of furlough on 30 September, many businesses are now waiting to see whether layoffs become necessary over the coming months.
“The UK is far from out of the woods when it comes to redundancies. It’s surprising to see so many businesses are considering reducing staffing numbers so substantially. Policymakers should be careful not to assume that the economy is back in rude health - especially taking into account how the new restrictions just implemented may further impact businesses,” she said.
“No business wants to lay off staff if it can be avoided and it seems like many are still waiting to see if they need to press that button. Their cash flow might allow them to keep their full workforces employed for now but they have plans in place to quickly make redundancies if they need to.”
Almost half of SMEs plan to raise prices, with supply chain disruption the key driver. Moore’s survey of owner-managed businesses also shows that 49% expect to have to increase the prices they charge over the next six months. 59% of those planning to raise prices say that disruption to their supply chain is the main reason for doing so.
38% of businesses say that increased staffing costs have been the main contributor to them increasing their prices, while 33% ascribe it to changes in the VAT treatment of overseas goods since Brexit.
34% of owner-managed businesses also say that supply chain pressures are among the biggest challenges they are facing over the next six months. This ranks higher than recruiting and retaining staff (27%), taxation (21%) and reducing carbon emissions (21%) and only slightly lower than securing new business (37%).