Sunday Express

Chancellor urged to extend UK furlough

Unemployme­nt figures to rocket, Sunak is warned

- By Geoff Ho

CHANCELLOR Rishi Sunak needs to extend the furlough scheme to prevent an even worse than expected surge in unemployme­nt, economists warn.

On Wednesday, his summer statement is expected to outline how the Government plans to prevent a post-lockdown collapse in employment.

According to the last forecast from EY ITEM Club think tank, the unemployme­nt rate will rise from 3.9 per cent during the first quarter to 7.5 per cent over the next three months.

However ITEM Club chief economic adviser Howard Archer warned that the rising tide of job losses means that the unemployme­nt rate is likely to see a higher than expected spike.

He said: “The jobs situation looks increasing­ly worrying.

“We’ve had a number of announceme­nts from several sectors – from retail, aviation and even profession­al services and with the furlough schemes due to be wound down, companies are making their move now.”

Nye Cominetti, senior economist at the Resolution Foundation, agreed and called on Sunak to extend support to the sectors hardest hit by the virus, such as shops, hospitalit­y and leisure groups.

“Britain is already in the midst of a jobs crisis, with employment falling by 430,000 between March and April. The furlough scheme has played a vital role preventing catastroph­ic levels of unemployme­nt, with over a third of private sector workers furloughed at its peak,” he said.

“With the scheme due to be phased out between August and October, a second wave of unemployme­nt is expected later this year. How big will depend a lot on how Government responds to the next phase and if the Chancellor extends support for the hardest hit sectors.”

Tens of thousands of redundanci­es have been announced since lockdown began, from companies as diverse as aviation engineerin­g giant Airbus, catering group SSP, Café Rouge and Bella Italia owner Casual Dining Group, tailor TM Lewin, Virgin Money and consultant Accenture.

Freddy Kelly, chief executive and co-founder of credit reference agency Credit Kudos, said: “It’s important the self-employed, who are vital to the UK economy, aren’t forgotten.”

According to Credit Kudos data, 60 per cent of workers with variable hours and 41 per cent of self-employed people and sole traders have seen their income “significan­tly” affected by the crisis.

More than 60 per cent of the selfemploy­ed and sole traders who have had to borrow to keep them afloat have been forced to turn to high-cost lenders, it said.

Newspapers in English

Newspapers from United Kingdom