The impact of the government’s so-called Plan B could derail the UK’s fragile economic recovery and have a devastating and disproportionate effect on SMEs, warns a leading restructuring and insolvency (R&I) practitioner.
Matthew Richards, R&I Partner at UK Top 10 accounting firm Azets, says unclear guidance and an increasing lack of confidence could lead to a catastrophic impact on SMEs. This comes at a time when support measures such as the Job Retention Scheme (JRS) are no longer available.
Richards says: “SMEs are the lifeblood of the UK economy, with over 5.5 million operating across the UK, employing over 16 million people and accounting for up to half of the revenue to the UK’s revenue. They have a critical part to play in the country’s economic recovery from nearly two years of turmoil. The ability to furlough staff where necessary and access other support measures that are now closed offered a lifeline for many of these businesses. Without these and with little clarity regarding the likelihood of even stricter measures, confidence among SMEs is now faltering and businesses are once again feeling exposed.
“The government’s Plan B could have big consequences for the business community – and could be potentially devastating for the hospitality and traditional retail businesses. People who have been told to work from home to stop the spread of the virus might feel uncomfortable socialising and that will further diminish what is normally a critical period for retail, hospitality, and leisure businesses.”
Richards says he does not foresee the re-introduction of schemes such as the JRS, under which businesses could claim up to 80 per cent of a furloughed worker’s usual wages with a cap of £2,500.
He concludes: “Given the significant amount of money already spent on Covid support measures, it’s likely the government might well resist bringing back closed schemes. This is bad news for businesses operating in a stop/start economy, some of which were only just getting back on their feet.
“Typically, it’s businesses who seek advice early that have the best chance of recovering from financial distress, and have more options open to them, with more time to take a decision about their next step.”
Azets is an SME focused international accounting, tax, audit, advisory and business services group, with 160 offices across the UK and Europe.