Chancellor urged to extend UK furlough
Unemployment figures to rocket, Sunak is warned
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.