The furlough cliff edge

Unless government has a change of heart the present furlough scheme will close 30 September 2021.

Businesses that have depended on this grant to hold teams together will – from 1 October – need to decide if business activity has increased sufficiently to maintain their workforces at current levels or consider redundancy options.

Planning is an obvious key requirement at this critical time.

Affected businesses should consider creating a forward estimate of sales and costs and see how these activity financials affect cash-flow and solvency.

One obvious difficulty in preparing these forecasts is trying to double guess the effectiveness of government efforts to control COVID disruption. The recent relaxation of social distancing rules may seem like a step in right direction but what if this overloads the NHS?

Vulnerable sectors remain the entertainment and hospitality trades. However, if further lockdown is required how will this affect business confidence and activity?

We must assume that uncertainty due to the COVID situation will remain with us for some time to come. Which elevates planning akin to sticking a pin on a map wearing a blindfold.

And yet plan we must…

Businesses that have survived thus far should take some comfort from their survival skills. We now have 18 months of hands-on experience to guide us as we contemplate what is to come.

If Richi Sunak starts to claw back the borrowings he has created to fund the furlough and other COVID related schemes – and if inflation starts to climb – his ability to provide additional grants is unlikely. Which means we must proceed on the assumption that from autumn 2021 we are on our own.

If you have concerns about the course of action you should take from October 2021, please call, we can help you consider your options.

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