The Bank of England latest Monetary Policy Report forecasts a five percentage point rise in the unemployment rate to 9% by next month.
Such an increase would take the figure to its highest level in more than 25 years.
Elsewhere, new figures from the Office for National Statistics (ONS) show that one in five (19%) staff are currently furloughed.
The Federation of Small Businesses (FSB)’s quarterly Small Business Index confidence measure crashed to an all-time low as the lockdown was taking effect.
At that point, one in 10 (9%) small firms were already considering the permanent closure, sale or handing on of their business. One in three (31%) were planning to reduce headcounts.
More than 16.5 million people currently work for smaller businesses, equating to 60% of the private sector workforce.
FSB National chairman Mike Cherry said: “The figures are a stark reminder that millions of jobs are stake in the weeks ahead. As we look to recovery, small firms must be allowed to get back on their feet one step at a time – 16 million jobs depend on it.
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“Our members are telling us in no uncertain terms that part-time furloughing is the way forward: allowing staff to return to work for a few days a week while remaining furloughed for days when they’re not required.
“The economy is not suddenly going to start firing on all cylinders overnight. Adjustments to the job retention scheme need to reflect that fact.
“Government must avoid applying sector straightjackets that don’t work for small firms. There are far too many businesses that don’t fit neatly into one box, like small companies that mainly supply to hotels, but aren’t classed as hospitality firms.
“We need to see these changes made from the beginning of June as small businesses begin to restart. Orders are going unfulfilled because a few hours work doesn’t justify bringing somebody off furlough. Businesses can’t even quote for jobs to be completed once restrictions are eased. Time is of the essence.”
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