The furlough scheme will last for another month and hard-pressed businesses will also be able to access state-backed loans until March, the Treasury has announced.
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The Coronavirus Jobs Retention Scheme, under which the state picks up 80 per cent of the furloughed worker’s wages, had been due to end at the end of March 2021 but will now end at the end of April.
And companies will be able to access state-guaranteed loans until March 2021, rather than January.
“We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs,” said the Chancellor Rishi Sunak.
The Treasury also said the next Budget will be held on 3 March and that this will “deliver the next phase of the plan to tackle the virus and protect jobs”.
This year UK firms have, collectively, borrowed some £65bn from the Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme, and the Coronavirus Large Business Interruption Loan Scheme.
This has enabled many firms to survive the biggest shock to the economy in three centuries.
But analysts have warned of a severe cash shortage facing many smaller firms in 2021, creating the need for additional state support to stop a wave of insolvencies.
Data released earlier on Thursday showed that at the end of October 2.4 million workers were still furloughed, accounting for around 7.5 per cent of the workforce.
That had been the month that furlough has originally been intended to end. On 5 November Mr Sunak announced, in the face of new restrictions and lockdowns, that the scheme would be extended to March.
Despite the extension of the furlough scheme, the Office for Budget Responsibility has projected nationwide unemployment to spike to 7.5 per cent next year.