Jobless to reach 2.6m by spring

THE number of unemployed is set to hit 2.6million in the spring as the furlough scheme comes to a halt – but job losses will not be as bad as previous forecasts suggested, it emerged yesterday.

The Office for Budget Responsibility (OBR) said the huge package of support measures announced by the Government had successfully fended off many job losses so far.

But it warned a cliff edge was coming when the furlough scheme ends in March, with the unemployment rate expected to reach 7.5 per cent afterwards. In the event of a No Deal Brexit, the watchdog said this could rise further to 8.3 per cent or 2.85 million as the economy suffers more damage. However, both of these are far lower than the 12 per cent peak unemployment rate the OBR predicted in July. They are also below the 8.5 per cent reached in the aftermath of the last financial crisis.

The current unemployment rate is 4.8 per cent or about 1.62 million people.

That figure includes more than 782,000 job losses since the crisis began in March.

The OBR said: ‘Grants, loans, and tax holidays and reliefs to businesses have helped them to hold on to workers, keep up to date with their taxes, and avoid insolvencies. Nonetheless, we anticipate a significant rise in unemployment as this support is withdrawn in the spring.’ Despite this, the watchdog said the Government’s support package had prevented the larger job losses seen in other countries such as the United States.

The extension of the furlough scheme and other measures are estimated to have saved 300,000 jobs that would have otherwise been lost. After 2021, the unemployment rate is expected to fall each year as the economy recovers to about 4.4 per cent by 2025.

Adam Marshall, director general of the British Chambers of Commerce, said: ‘With an uncertain winter ahead, the Government will need to maintain an open mind on providing further support to businesses struggling to survive.’