The government this week announced its intentions to proceed with the next stage of unlocking on July 19, this news will be welcomed by many businesses and gives them encouragement for the future.
There is still uncertainty around the guidelines for social distancing and quarantine regulations. Along with this business will have the concern of government financial support beginning to wind down from the July with the furlough scheme changing to include more contribution by businesses.
From Thursday July 1 the government furlough grant will be reducing to 70% with the employer required to make up the remaining 10%. This continues until August where the grant reduces to 60% with businesses required to pay the difference and make up the remaining 20% of workers wages to ensure they still receive the 80%. Employers are still required to pay National Insurance and pension contributions.
Countless businesses have benefited from the furlough scheme, allowing them to retain their staff and not have to worry about redundancies. The tide will change however when firms are required to make further contributions. Delayed lifting in restrictions along with a tough beginning to the year, stemming from a nation lockdown, have heaped pressure on businesses cash reserves and seen their profits take a hit.
For some businesses this contribution may simply push them over the edge with some firms not having enough time to regain lost profits.
For these firms who have struggled and seen the most damage to their cashflow and revenue, they may need further support from the government in order to get back on their feet before the stabilisers are completely removed and support is rescinded.
Industries such as hospitality and the events sector have particularly been hit by the restrictions and the delay in easing these measures. In order for these business to re-open and begin contributing to the recovery effort, government should be clear on how it plans on supporting businesses who need it and when it plans to allow our businesses to fully operate.