The chancellor has said the job retention scheme cannot “carry on indefinitely”.
On a visit to Scotland, Rishi Sunak said it was “wrong to keep people trapped” in a situation where there was no realistic prospect of them having a job to go back to.
The Scottish government has called for furlough to be extended, particularly for the hardest hit sectors.
Mr Sunak said ending furlough had been a “very difficult decision”.
The chancellor is using his visit Scotland to highlight the benefits of UK government schemes for businesses during the coronavirus pandemic.
This includes 65,000 businesses in Scotland being supported through loan schemes, paying out £2bn.
Speaking on Good Morning Scotland, Mr Sunak referred to Scotland as a “power brand” when it comes to UK tourism.
Asked why the furlough support was not being extended to industries such as tourism, which is expected to be among the worst affected for longest, he said “most reasonable people” will agree that the government helping to pay private firms’ wages was “not something that can carry on indefinitely”.
He added: “It is wrong to keep people trapped in a situation and pretend there is always a job that they can go back to, that won’t always be the case.
“In those situations it’s better we look forward and provide those people with new opportunities.”
Mr Sunak is the fourth UK minister to visit Scotland in recent weeks.
Extra support needed for the economy
Economy Secretary Fiona Hyslop, who will announce extra support for Scottish businesses later, called for more borrowing powers for Scotland to make up for a shortfall in UK investment in recovery.
Speaking to Good Morning Scotland, she said: “We would use it flexibly, use it responsibly and use it to stimulate the economy and support jobs.”
Mr Sunak said the Scottish government already has “significant flexibility” on funding and said the UK Government was “looking at revising and reviewing the fiscal framework over the next year or so .”
The UK government’s bounce back loans scheme, which was announced in April, offers between £2,000 and 25% of the turnover of small and medium businesses.
The UK government also guarantees the loans, which have no interest for the first year, before the rate rises to 2.5% after 12 months.
Since the scheme started, the Treasury said 63,469 loans had been approved, totalling £1.8bn.
For the coronavirus business interruption loan scheme, more than £587m has been paid out to date to businesses looking for up to £5m.
The UK government guarantees up to 80% of the loan and will pay interest and other fees inside the first year.