The latest UK unemployment figures have been described as “frightening” with worse yet to come as the furlough scheme winds down and major redundancy announcements from the likes of Boots and Rolls Royce are yet to feature in the data.
The number of paid employees was down 649,000 in June over the three months from March, according to HMRC and ONS data. Most of the job losses were at the start of the period.
The number of people claiming unemployment benefits dipped 28,100 from May highs to just over 2.6m in June. But the total number of claimants is up 112.2% since March.
The figures pre-date largescale redundancy announcements from major UK employers this month. Boots, Rolls Royce and John Lewis are among the latest companies to announce job losses in the thousands. In the hospitality space, Upper Crust, Pret A Manager and Burger King have also announced mass redundancies, while Casual Dining Group fell into administration at the start of the year.
Frightening figures with worse to come once furlough scheme winds down
Beaufort Investment chief executive Derrick Dunne said the job losses in June were “frightening” but that worse could be on the way as furlough is tapered in August before being wound up in October.
Dunne said: “The more meaningful updates are likely to be in August, as that will have the Q2 set of data and employers will have to start contributing to employee costs and make difficult decisions for a future without furlough support.”
Rishi Sunak’s job retention scheme, which pays 80% of an employee’s wages if they are temporarily unable to work, now covers 9.4 million workers. It has cost the Treasury £28.7bn so far. The scheme is currently capped at £2,500 a month.
Boris Johnson needs policies to protect the UK from a second wave
Close Brothers Asset Management head of investment services Robert Alster thought the figures could have been considerably worse given the scale of economic disruption the coronavirus has caused.
But Alster argued the furlough scheme masked the true scale of the pandemic’s effect on unemployment and warned of the risks of a second wave.
“Recently, the OECD made a bleak prediction that one in seven workers could be made redundant should there be a second wave. All eyes will be on whether the government’s health and social policies are effective in protecting us from a repeat lockdown and the ensuing damage.’’
