East Anglian employment lawyers are predicting a “long and difficult road ahead” for workplaces — even after chancellor Rishi Sunak announced massive support measures in his budget.

The furlough scheme has been extended to the end of September in a bid to stave off mass redundancies, but Vanessa Bell, who is partner and head of employment at Prettys Solicitors in Ipswich, said in the long term, redundancies, pay cuts and contract changes would be “unavoidable” for many.

The furlough scheme extension meant businesses can start putting plans in place for the coming months — but that won’t mean that workplaces will be able to return to their pre-coronavirus days, she warned.

“Following the roadmap announcement last month, it’s clear that businesses may struggle to get all their employees back to work at once – particularly in the hospitality sector as the phased approach to reopening may mean fewer staff are needed,” she said.

“It’s fair to say we still have a long, difficult road ahead of us. In the long term, redundancies, pay cuts and contract changes will be unavoidable for many, so it’s important employers seek legal advice and start planning ahead.

“It is clear that we have a difficult few years ahead, but the announcement today has outlined a variety of initiatives to allow businesses to make more informed decisions on their future, so hopefully this will help save some of the businesses that have been affected the most by the pandemic.”

The introduction of grants, business rate extensions and VAT relief in the March 3 budget would no doubt be a “short-term saviour” for many businesses in the hardest hit sectors, she said.

“The plan appears to be to support businesses of all sizes – from a reduction in corporation tax, extra funding for apprenticeships and traineeships and investment incentives, to small business support with digital skills – so a real desire to create economic growth.”

The UK economy has already shrunk by a tenth as a result of the crisis — and more pain is ahead, experts predict.
But the Office for Budget Responsibility (OBR) is predicting the economy will recover to pre-crisis level by the middle of 2022 - six months earlier than previously expected - thanks to a “swifter and more sustained recovery”.

Unemployment caused by the pandemic will be lower than expected, peaking at 6.5%, down from 7.5% predicted last November, it said.

Chancellor Rishi Sunak warned the crisis will do “profound damage” to the economy, with the OBR still forecasting it will be 3% smaller in five years due to the crisis than it would have been.