THE SNP has united with Scottish businesses in warning the UK Government to perform a U-turn on the rowing back of the furlough scheme or face a rash of job losses.

SNP Westminster leader Ian Blackford warned the Tory Government that it was making a “grave mistake” by cutting off the furlough scheme prematurely with support being cut back from August 1.

He has urged Chancellor of the Exchequer Rishi Sunak to reverse the cuts, if it causes a spike in redundancies, and to extend the scheme into next year instead of cutting it completely on October 31.

Earlier this week the Office for Budget Responsibility (OBR) warned UK unemployment could surpass the peaks of the 1980s, with unemployment potentially doubling to a peak of 12% in the run-up to Christmas.

The Office for National Statistics (ONS) found the UK economy is now 24.5% smaller than it was in February.

READ MORE: Almost 900,000 Scots on furlough or in receipt of self-employed support

Separately, while the ONS labour market survey revealed levels of employment had fallen by 650,000 between March and June, with unemployment reaching 3.9% and a reduction in pay, hours worked, vacancies and new starters.

Blackford said: “We are still in the middle of a global pandemic and there is a very real danger of a second wave. Many businesses are already on the edge, and thousands of job losses have been announced as they prepare for the UK Government’s cuts to hit home.

“In addition to extending the furlough scheme, the UK Government must deliver the powers and funds that Scotland needs to secure a strong recovery.

“That means a meaningful fiscal stimulus package of at least £80 billion in new investment and the devolution of financial powers to ensure a tailored response that meets the specific needs of Scotland’s economy.”

Colin Campbell, PR for Scottish Chambers of Commerce weighed in with a call on the UK Government to help targeted sectors that have been hit the most.

He said: “The UK Government has been set on going down the route it has so this is something of a dead ask but if they could help more targeted areas such as hospitality and tourism this could certainly be a boost.

“As the Government support eases employers are faced with paying more into the scheme and must decide whether to bring back people or make cuts.

“The other question is how we can stimulate the economy as people come back out of lockdown and we get a flurry of people queueing.

READ MORE: PMQs: Boris Johnson rejects demand to transfer furlough powers to Holyrood

“After damning analysis from the IFS, OBR and ONS this week, it is clear that the UK Government’s summer statement did not go anywhere near far enough to protect jobs and kickstart the economy.

“The Tory Government must raise its ambitions and deliver a real fiscal stimulus of the kind the SNP has been calling for - and other countries are delivering.

“Scotland can make different choices to protect jobs and secure an investment-led recovery - but we can only do it with powers and funds required. If the Tory government withholds these it will inevitably cause unnecessary pain for people and communities across Scotland.”

On Thursday, the British Chambers of Commerce (BCC) revealed that almost a third (29%) of the 7400 firms surveyed expect to axe jobs over the third quarter which will be a record high.

The STUC issued a stark warning about the effects of easing the furlough support scheme.

Dave Moxham, the deputy general secretary of the STUC, said: ‘We agree totally with Ian Blackford. The UK Government has created an unnecessary cliff-edge which threatens to undo some of the good work of the last three or four months.

“Certain sectors of our economy need more help that is causing problems for our members. We know that there are 250,000 employed in hospitality in Scotland and that nearly half of employers are indicating that they will cut jobs.

“If the UK Government were to give two or three or four months we would see the benefit.’