UK unemployment could hit 3m by Christmas - CEBR
The number of unemployed in the UK could rise to 3m by Christmas as the government’s coronavirus furlough scheme ends this month, a leading think tank warned on Monday.
British business were planning to lay off more than a third of furloughed workers after the scheme ends this month – the equivalent to 1.2m people, according to the Centre for Economics and Business Research (CEBR).
The Coronavirus Job Retention Scheme, which paid up to 80% of salary, expires on October 31 and will be replaced by a new Job Support Scheme, with payments decreasing to a maximum of 67%.
A rise in cases in across northern Britain has led to tougher restrictions being imposed, with the government to on Monday announce a tiered systems of curbs to stop the virus from spreading quickly in the winter.
However, political leaders in the region have berated the measures, in particular the financial relief, as being insufficient and ill-thought out.
“The low-skills, low-pay sectors which are particularly affected by this crisis (eg hospitality) will not make extensive use of this. The scheme is, therefore, unlikely to prevent a major loss of jobs,” the CEBR said.
“With a large number of people going from furlough into unemployment, household incomes and aggregate demand will drop. All this is in addition to the other flows from employment into unemployment, which have risen at a fast pace since the summer, partially due to the increase in case numbers and new local lockdowns.”
Latest data from the Office for National Statistics revealed 155,000 redundancies between May and July 2020, the highest increase since 2009. The CEBR estimated that this could lead to a further 300,000 jobless by the end of the year.
“In total, we therefore calculate that 1.5m more people could lose their jobs by Christmas, with the total number of unemployed peaking at just under three million and the unemployment rate rising to 8.5% in the fourth quarter compared with the 8% which we forecast previously.”