Official UK employment figures for July suggest employment is down 730,000 compared to March 2020. However, with the government furlough scheme still in place, and support for businesses in the form of tax and government-backed loan payment deferrals ongoing, millions more job losses may follow unless urgent action is taken to convert, restructure and repay the high levels of unsustainable debt SMEs have built up in the wake of this crisis.
According to a recent report by TheCityUK and EY, up to 3 million jobs across the UK – equivalent to every job in the West Midlands – and 780,000 small and medium-sized businesses (SMEs) are at risk unless urgent action to tackle the projected £35bn of unsustainable debt from Covid-19 loans is taken. With around three quarters of this projected unsustainable debt held by firms outside London, a national solution is needed as soon as possible.
Marcus Scott, Chief Operations Officer, TheCityUK said,
The government’s support for businesses and employees has been essential in preventing the scale of job losses and economic scarring we have seen in other economies. While this has been essential for their survival, the pressure on SMEs in particular to repay the loans will be intense. Without support to restructure this debt, many more jobs will be lost, and the financial prospects of small business owners left in tatters.
“This is not a problem which can be left to fester. In many cases, firms’ cash reserves are already largely depleted and urgent action is needed within months. TheCityUK and EY have put forward recommendations to convert, restructure and repay the high levels of unsustainable debt SMEs have built up in the wake of this crisis. We urge the government to take forward the recommendations to help hundreds of thousands of SMEs get back on their feet, save millions of jobs, protect billions of pounds of taxpayer money and help power the UK’s economic recovery.”