Job­less rate could reach 15pc if cases surge

Chan­cel­lor told to re­place fur­lough with job stim­u­lus as OECD re­veals risk of soar­ing un­em­ploy­ment

The Daily Telegraph - Business - - Front Page - By Tim Wal­lace and Lizzy Bur­den

THE jobs catas­tro­phe fac­ing Bri­tain has been laid bare by a string of bleak fore­casts as Rishi Su­nak seeks to kick­start the re­cov­ery to­day.

Un­em­ploy­ment could soar close to 15pc if Bri­tain is struck by a sec­ond wave of the coro­n­avirus, ac­cord­ing to the Or­gan­i­sa­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment (OECD), its high­est level since the Great De­pres­sion 90 years ago.

It urged coun­tries to end poli­cies such as the UK’s fur­lough scheme, which pays up to 80pc of work­ers’ wages, and fo­cus on mea­sures that en­cour­age em­ploy­ers to cre­ate new jobs.

Re­cruiters have warned that de­mand is fall­ing sharply for new staff in all in­dus­tries. Think-tanks said it could take un­til 2024 for the econ­omy to fully bounce back. The pre­dic­tions un­der­line the scale of the disas­ter that the Chan­cel­lor is seek­ing to avert as he sets out new mea­sures this af­ter­noon in an ef­fort to bring the coun­try back from the brink. Mr Su­nak’s plan is ex­pected to in­clude £2bn for youth jobs, hir­ing thou­sands of new job centre staff and pump­ing re­sources into train­ing po­si­tions and work ex­pe­ri­ence.

Econ­o­mists at the OECD ex­pect UK un­em­ploy­ment to surge from be­low 4pc at the start of 2020 to 11.7pc by the end of this year, a far greater hit than dur­ing the fi­nan­cial cri­sis and the high­est rate since the Eight­ies. If a sec­ond spike in virus cases oc­curs, it could send un­em­ploy­ment up to 14.8pc, the high­est since 1932.

The ini­tial blow struck by the pan­demic has been 10 times worse across the rich world than the fi­nan­cial cri­sis in 2008, the OECD said, with a decade of jobs growth wiped out in just three months.

The group said end­ing fur­lough “would re­duce the pres­sure on public bud­gets and also the risk that job re­ten­tion schemes be­come an ob­sta­cle to the re­cov­ery by curb­ing job re­al­lo­ca­tion to­wards more vi­able and pro­duc­tive firms. Con­cerns about po­ten­tial abuse may also be­come more prom­i­nent as some firms con­tinue to claim sup­port for short­ened hours even af­ter work­ers have re­sumed their nor­mal sched­ules”.

The fur­lough scheme has so far helped to pre­serve jobs, with al­most one worker in ev­ery three paid by the Gov­ern­ment to stay at home at the peak of the pan­demic.

How­ever, it is feared that re­dun­dan­cies will now snow­ball as sup­port is grad­u­ally with­drawn be­fore the scheme ends in Oc­to­ber. Ma­jor firms an­nounced more than 12,000 lay-offs last week alone. Re­turn­ing to the record em­ploy­ment lev­els of the pre-pan­demic era will not be easy.

GDP will not fully re­cover un­til 2024, ac­cord­ing to fore­casts from the Centre for Eco­nomics and Busi­ness Re­search and ac­coun­tant BDO.

Separately, new data from the Trea­sury showed more than a mil­lion tax­payer-backed bounce­back loans of up to £50,000 have now been ap­proved to help small busi­nesses weather the pan­demic, worth a to­tal of £30.9bn, on top of more than £2.5bn of loans for larger firms.

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