Redundancies will come “pretty quickly” after changes to furlough scheme, says IEA expert
Victoria Hewson quoted in the Daily Telegraph
In response reported changes to the Coronavirus Job Retention Scheme, IEA Editorial and Research Fellow Professor Len Shackleton said:
“Many businesses are going to find it hard to pay a proportion of wages (and associated NI contributions) if they are still prevented from opening, or have a business model which can’t accommodate 2-metre social distancing. At the moment most such businesses have very little income yet have continued outgoings on rents, electricity, contracts with suppliers and so on. Extra payments for workers who are unable to work cannot be sustained.
”It seems likely that the only way to avoid bankruptcy for many, particularly smaller businesses, will be to make staff redundant and/or close the business down completely. The biggest hits are likely to be in areas where social distancing will mean much smaller capacity – restaurants, cafes, many pubs, smaller shops.
“Many consumers are going to be very cautious about going into potentially crowded places. Home-based lifestyles are going to be more popular. In time business will react to this, but in the short run many jobs will necessarily disappear. It is possible at least two million jobs will go.”