As coronavirus restrictions take their toll on the economy, the Observer has spoken to struggling business owners and people who have lost their jobs in the past three months. The end, in October, of the government furlough scheme, which covers 80% of the wages of workers temporarily laid off, is expected to trigger a spike in unemployment. But with figures last week showing a fall of almost 650,000 in the number of employees on payrolls between March and June, damage is already being done.

‘Grim does not begin to describe this’

Amalia says she has kept her independent gift shop going for 32 years thanks to her “wonderful, loyal customers” but that she is now fearing the worst. “I reopened the first day I was allowed to – on 15 June – and I knew some customers would be tentative about coming back, but the first month has been absolutely, devastatingly worse than I expected. It has been like starting a brand-new business, opening up in the morning and not knowing whether anyone will come inside.”

Footfall is 10% of what it was and she is “stumped” about what to do. “There are no students, no tourists, no office workers. Some customers ring or email, and I’ll post them anything they want to buy. I am working from 7am to midnight, six days a week, covering the shop alone as I can’t afford to have my staff back in. I do it because I love my little business.”

With so much uncertainty, it is “virtually impossible” to plan. “Should I buy new stock? Will I still be open to sell it? I look around the shop and worry I’ll not be able to sell the stock I do have. I’m approaching 60 and I honestly thought I’d be reasonably stable at this stage of my life. I’m too old for this!”

Amalia put her staff on furlough at the start of lockdown and initially topped up their pay to the full 100%. “I didn’t want them to lose out, but after 14 weeks of haemorrhaging money, I was having to use credit cards to cover the extra costs and I couldn’t afford to keep doing it,” she says.

She wants the government to extend the furlough scheme beyond October. “I can’t expect a continuous bailout from the government, but would it not be better to pay people furlough money than unemployment benefit? At least that way there is hope.

Grim doesn’t begin to describe this.”

‘Covid-19 has taken the heart out of my business’

Keith McAllister, 46, has run a cafe in the centre of Chester for 15 years. It had always been a bustling place, full of locals and tourists. Then coronavirus changed everything.

“It has been heartbreaking to see,” he says. “After initially shutting the cafe, I have reopened, first as a takeaway and then with a couple of tables. But it’s not what it used to be and doesn’t feel the same.”

Though McAllister has retained some regular customers, the lack of tourism is affecting his business.

“Chester relies heavily on tourism, especially from April to September. The government did help with a loan, but the footfall just isn’t there. My revenue is now down 60%. I’ll just keep plugging away, trying to make it past Christmas. It’s frustrating as this has happened through no fault of my own. Covid-19 has taken the heart out of my business.”

‘I’ve applied for 350 jobs’

“The whole situation is utterly heartbreaking,” says Londoner Cameron Scarlett, 24. Scarlett applied for 350 jobs in the five days following his redundancy from his job as a digital publisher, and hasn’t been successful in any. He received just five rejection emails, which he says is a “slap in the face” given the time he spent on applications.

This is the second time Scarlett has been made redundant since graduating. “In some ways that helps,” he says. “I’ve done it before. The first time I cried in a bathroom.”

Scarlett has around £50 a week left after bills and rent, and reckons he has enough money to stay in London until October. After that, he may have to return to his parents’ home in Yorkshire.

“If I can’t find a job by October, that’s it,” he says. “I don’t have five grand stashed away or someone to pay my rent. Unless I find the money, it’s time to go.”

‘It feels like I’m back at square one’

Beth, a 39-year-old freelance TV producer in London, says that almost all of her booked work was cancelled or postponed during lockdown. As she had become self-employed just under a year ago, she is not eligible for any self-employment grants.

“It’s not like you do this job thinking you’ll have endless amounts of security, but it just doesn’t feel fair,” she says. “I’ve worked for many years and there are records of that, but just not the right kind.”

She has applied for work both within her industry and for jobs in supermarkets, but has not found anything, and worries that as the number of redundancies increases, competition for jobs will soar.

“I’ve been made redundant before, but then it was different, because I knew the work was out there,” she says. “Its not that I don’t think the industry will rebuild, but I don’t know how quickly, or what jobs we will decide we don’t need along the way… Or what we’re supposed to do in the meantime.”

Interviews by Molly Blackall and Paul Campbell