1.4m jobs could be lost from small businesses

Battered small businesses will be forced to slash 1.4m jobs without decisive action by ministers to rescue the economy, according to new research .

More than three-fifths of small and medium firms have already launched redundancies or are planning to do so as they reel from the impact of the pandemic, according to a survey by computing company Sage.

If a second wave of coronavirus strikes then 15pc of companies expect to go bust, while half of respondents fear they could go bust if revenue drops by a fifth between now and September as the economic carnage continues.

The bleak figures are likely to spark alarm in Whitehall and lead to calls for Chancellor Rishi Sunak to dole out billions of pounds more in economic support. Small and medium businesses are the backbone of the economy, accounting for 60pc of private sector employment.

Management culls are likely to account for much of the job losses, the study found, with bosses’ positions most at risk in the coming months.

Of the 2,000 firms questioned, 65pc said management jobs were most likely to be targeted because of excessive wage costs or overstaffing before the pandemic hit.

Some 79pc of businesses do not expect be making the same profits they did before the pandemic by the end of the year.

Firms welcomed measures brought in to protect businesses such as the taxpayer-funded furlough scheme, state-backed loans and grants, but now they say further action is needed.

Sage managing director Sabby Gill called the findings of the report “gut wrenching” with “thousands of individual stories of people whose livelihoods and passions are under threat behind the stark statistics”.

But he added that businesses are embracing the digital revolution as a result of Covid, potentially pushing productivity higher with long-term benefits as fewer staff are able to do more work online.

Sage said small firms could be  encouraged to invest in technology with tax breaks and other support.

The company also called for the government to back new business creation, boost training and help companies to grow their exports.

Meanwhile, events industry chiefs fear that 30,000 jobs will be lost without clear guidance on how and when businesses can restart.

The Events Industry Alliance lobby group said that the economy will suffer an £8bn hit if conferences and other gatherings remain banned all year.

It warned that 60pc of firms which supply the industry will go bust without a rapid restart.

Unlike most other businesses, events firms have been given little idea of when they can return to normal.

Exhibitions will need eight to 12 weeks’ warning to restart, the trade body said. It warned that a lack of government guidance is causing a confidence crisis among the industry and its customers.

Chris Skeith, chief executive of the Association of Event Organisers, said: “The exhibitions sector is a vital enabler of economic activity in almost every sector of the UK economy.

Several other countries, including France and Germany, have already announced steps to reopen exhibitions.