Pessimism reigns in UK businesses as a quarter expect job cuts

LONDON, ENGLAND - MARCH 19: A sole member of the public walks near the Lloyds of London building at what would be rush hour on March 19, 2021 in London, England. A year since the British government issued its first stay-at-home order in response to the Covid-19 pandemic, on March 23, 2020, the City of London is still a ghost town of shuttered shops and restaurants, scarcely populated offices, and negligible tourist traffic. Even as the UK prepares to ease the current lockdown measures, a sense of normality in the city's historic financial district feels a long way off. (Photo by Dan Kitwood/Getty Images)

Around half of the businesses surveyed said they had struggled to service debt payments within the past year. Photo: Dan Kitwood/Getty Images

A quarter of UK workplaces expect to reduce headcount next year and a third said they already have, according to study by consultancy firm PriceWaterhouse Coopers. 

The forecasts come despite two-thirds saying in the PwC survey they expect revenue to return to pre-COVID levels within two years. 

The research found that with the withdrawal of the job support scheme, staff cuts could be even higher. 

The poll of 400 British executives also found that more than half (55%) of UK businesses expect to be saddled with debt on their balance sheets within a year, as earnings fail to keep pace with the rate of spending. 

A similar proportion said they had struggled to service debt payments within the past year. 

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As COVID-19 continues to be the source of the majority of business disruption in the UK, more than half of the respondents to the PwC survey said they experienced a Brexit-related disruption in the past year. Similar proportion said they expect to face it this year. 

PwC also found that 61% have not produced 12-month forecasts that plan for a range of best and worst-case scenarios. Of those who have, only 49% are proactively working to mitigate the risks identified as part of their worst-case scenario forecast.

“As with any ecosystem there are those who rely on a symbiotic relationship with businesses. Landlords, suppliers and lenders among other stakeholders will be critical as long term behavioural changes and online consumerism shape business strategy and real estate footprint,” said Steve Russell, head of business restructuring services at PwC. 

“Encouragingly of the 152 respondents producing a range of forecasts for the next 12 months, six in 10 have weaved in emerging trends such as hybrid working patterns into their scenario planning.

“The use of Restructuring Plans and other restructuring mechanisms is likely to increase as businesses aim to preserve roles and ensure continuity. The greatest value will be achieved by ensuring key stakeholders are not only welcomed to the negotiation table, but encouraged to remain there by being treated fairly.”

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