More than 900,000 small firms are at risk of going out of business in the next few months, threatening a fresh wave of job losses, new research suggests.
A huge increase in bankruptcies for UK firms looms as business support programmes end, according to the Centre for Economic Performance (CEP) and the Alliance for Full Employment (AFFE).
Almost 15%, more than one in seven, UK businesses are at risk of imminent closure, especially those with fewer than 10 employees, it was warned.
The impact on employment is “grim”, with around 2.5 million jobs under threat from business closures, warned the report.
Professor John Van Reenen and Peter Lambert said the bleak scenario they predict in their report can be alleviated by imaginative government intervention.
“Without further policy action, businesses face a cruel spring of bankruptcy,” said Prof Van Reenen.
“The current policy trajectory must be altered in order to provide protection now and to map a path for post-pandemic prosperity,” adds Mr Lambert.
Former prime minister Gordon Brown, who launched the AFFE last year, urged the Government to use the report to make an “urgently needed” long-term business recovery programme the centre piece of the budget in March.
If Chancellor Rishi Sunak were to follow the report’s advice, he would be able prevent “the liquidity crisis of 2020 becoming the solvency crisis of 2021”, said Mr Brown.
He said: “Governments cannot afford to be behind the curve, especially in a crisis.
“They have to be at least two steps ahead.
“But today the fate of thousands of small businesses hangs in the balance.
“Millions face an uncertain future after March when the furlough is to end.
“Youth unemployment is already at record levels – all concerns that a forward-looking government should be dealing with today.
“For all its welcome focus on help through loans and the financing of the furlough, the Government has said little and done little that offers struggling businesses the prospect of long-term survival.
“If we are to save good small businesses that are innovative and forward looking but which, without help with their investment plans, are in danger of going under, the Budget must bring forward measures.
“It is time to offer new hope to what will otherwise be dying firms.”