Fears are growing of a surge in unemployment before Christmas as the recovery in the economy falters under pressure from a second wave of Covid-19.
The Institute of Public Policy Research and the Centre for Economics and Business Research, two leading think tanks, have warned that the chancellor’s job support schemes will do little to prevent a rise in redundancies this winter.
Their warnings come amid darkening prospects for small companies, with research by Fladgate, a law firm, showing that 35 per cent of small and medium-sized enterprises fear that they will not be operating beyond a year.
The IPPR is warning of nearly three million job losses. It adds that almost two million people of the three million people presently on furlough had been working in viable roles — that is jobs that are likely to return once Covid-19 restrictions are lifted.
The government’s jobs support schemes will preserve only about 230,000, meaning that just under 1.8 million viable jobs are still at risk.
The CEBR is estimating that at least 1.25 million more people could be laid off by Christmas. Originally it was forecasting 1.5 million, but has revised its projections after Rishi Sunak announced new support measures on Friday. The government said that it would pay two thirds of workers’ wages for businesses that are forced to shut, up to £2,100 per month, per person.
The CEBR says that its “rough and ready estimates” suggest that this will save at most 150,000 to 250,000 of the 1.5 million jobs it had been expecting will go.
Forecasts released today by the EY Item Club show that it has lowered its estimates for economic growth next year to 6 per cent, from 6.5 per cent, and expects growth of at most 1 per cent during the final quarter of this year.
It has trimmed its outlook despite estimating that GDP expanded by between 16 per cent and 17 per cent quarter-on-quarter during the three months to the end of September.