Significant cashflow difficulties still facing UK businesses

UK businesses are still facing significant cashflow challenges with the government schemes announced in the Summer Statement failing to protect jobs after the furlough scheme winds down, according to the British Chambers of Commerce (BCC).

The BCC’s latest Coronavirus Business Tracker indicated that more than half of firms have reported a cashflow decrease since June 2020, while more than a third of respondents with improved cashflow cite that it is from furlough scheme cash.

The survey, which serves as a barometer of the pandemic’s impact on businesses and the effectiveness of government support measures, received 517 responses and is the largest independent survey of its kind in the UK.

This most recent data contains the BCC’s first survey of business sentiment on the Summer Statement announcements made by Chancellor, Rishi Sunak, on 8 July.

BCC co-executive director, Claire Walker, commented: “Business communities continue to face significant operational challenges, with a prolonged period of reduced sales and cashflow meaning many firms are showing signs of distress.

“Expected usage of schemes announced in the Summer Statement is relatively low, indicating they do not provide the right kind of support for many businesses at this critical time and a rethink is needed.”

The BCC’s data showed that 43% of firms intend to access the Job Retention Bonus, which will award £1,000 to firms who retain furloughed staff until January, although a further 40% will not use the scheme.

Fifty-six per cent of businesses said they did not intend to use the Kickstart scheme, a further 31% said they had not heard of the scheme, and 8% said they would like to use it but are ineligible.

Another 20% of respondents said they would like to make use of the targeted VAT cut for certain businesses but that they were ineligible, which the BCC said indicated that some businesses think the scope of the scheme is too narrow.

“With confidence and demand not returning at the scale firms need, the Government must take radical steps to slash the tax burden around employment to help companies pay valued staff,” Walker added.

“A major boost to the Employment Allowance, and an increase in the threshold for employers’ National Insurance contributions are needed now if [the Chancellor] wants to help viable companies save jobs as the furlough scheme comes to an end.”

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