UK unemployment; ‘the worst is yet to come’

The Office for National Statistics released new jobs market data Tuesday, revealing the highest level of unemployment in three years. The rates of job insecurity vary from sector to sector; however as lockdown restrictions tighten the forecast for the hospitality sector looks gloomy. The industry experts all seem to agree on one particular theme; the worst is yet to come. 

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown said, ‘The UK jobs market is already more precarious than forecast with unemployment rising by 4.5% in the three months to August, pushing up the total to 1.52 million, the highest level for more than three years.’ Robert Alster, CIO at investment management firm Close Brothers Asset Management, comments, ‘These figures are likely to leave families, businesses, and policymakers anxious about the shape of things to come.’ 

Alster suggested, ‘“As we move towards Winter we’ll get more of a picture of the wider economic reality. If we see further, more severe lockdowns – it’s likely that the Government will face more demands for sector-specific rescue packages.’

Derrick Dunne, CEO at Beaufort Investment,  struck blunter tone, saying ‘Tuesday’s worse-than-expected figures marked the largest 3-month surge in unemployment for a decade, and unfortunately we are only at the beginning of this jobs nightmare.’

Streeter echoed Dunnes’ point, ‘the mass furlough scheme won’t be ending for another few weeks. With the general subsidy removed, many thousands more people are expected to be ejected from their jobs into what will be a difficult search for work.’ 

As the furlough scheme comes to an end, Dunnes raised concern for the many businesses’ hamstrung by the pandemic and unable to trade.’

Streeter pointed to ‘The arts, entertainment and recreation sector is expected to be particularly badly hit, with 51% of workers on furlough with so many venues still closed.’ 

Dunnes said, ‘Hopefully other parts of the economy will see surges in demand for their services – particularly in areas like home delivery – which will help offset the rising jobless figures, but we still think the numbers are going to spike significantly.’

Streeter highlighted the hospitality sector. ‘Although there was a sharp increase in business over the summer for the restaurants, bars and hotels, due to the Eat Out to Help Out scheme and ‘staycations’, fresh restrictions on trade such as the 10pm curfew and new local lockdowns, are leading to a decline in trade. 

Alster noted, ‘While Rishi Sunak’s support scheme may have helped keep a cap on unemployment rising substantially through August, he’ll be hoping his new plan will make sure unemployment doesn’t spike upwards.’

Dunnes concluded, ‘With further measures being imposed to combat coronavirus, we expect the unemployment rate could very swiftly reach the 8% mark it last saw in 2012.’

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