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‘Almost 3,000,000 to be unemployed by Christmas’ as furlough scheme ends

Three million jobless by end of the year
Almost 3,000,000 people could be out of work this Christmas (Picture: PA / Getty)

Almost 3,000,000 people will be unemployed by Christmas as Rishi Sunak’s new furlough scheme is ‘unlikely to prevent a major loss of jobs’, a think-tank has predicted.

The Centre for Economics and Business Research (CEBR) said businesses hit hardest by the pandemic will lay off more than a third of their furloughed staff once the Job Retention Scheme runs out on October 31.

The new Job Support Scheme will then replace the programme in November by paying up to 67% of workers’ wages at companies forced to shut due to coronavirus. The previous scheme paid up to 80% of employees’ salaries.

The CEBR said: ‘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.’

Analysing data from the Office for National Statistics (ONS) and its Business Distress Tracker, the think-tank therefore calculated that 1,500,000 more people could lose their jobs by Christmas.

The changing face of the high street. A lady wearing a face mask walks past a shop displaying social distancing instructions and a sale sign, in Chester city centre, some six months on from the evening of March 23 when Prime Minister Boris Johnson announced nationwide restrictions. PA Photo. Issue date: Wednesday September 23, 2020. See PA story HEALTH Coronavirus. Photo credit should read: Martin Rickett/PA Wire
The current furlough scheme will end in a few weeks time (Picture: PA)

This would put the total number of jobless people at just under 3,000,000 and raise the unemployment rate to 8.5% in the final quarter, compared with 8% previously predicted.

The CEBR went on to say a ‘readjustment of the economy’ will be required from the Chancellor. They added: ‘[The] expected announcement of a tiered furlough scheme for businesses affected by the new lockdown should go some way to prevent further job losses, though the coming winter looks set to be a tough one.’

The number of workers on company payrolls dropped by almost 700,000 between March and August, ONS data previously revealed. Redundancies in the three months to July rose at the fastest pace since 2009, up 48,000 from the previous quarter.

It comes as Sunak unveiled his Job Support Scheme, a successor to the furlough scheme, last week. It will begin on November 1 and run for six months before next being reviewed.

File photo dated 17/02/16 of a Job Centre Plus in London. The Government is promising to help hundreds of thousands of jobseekers with a new employment programme, targeting those left without work because of the virus crisis. PA Photo. Issue date: Monday October 5, 2020. Job Entry Targeted Support (JETS), backed by a ?238 million investment, is aimed at helping those out of work for three months. See PA story INDUSTRY Jobseekers. Photo credit should read: Philip Toscano/PA Wire
Nearly 700,000 people lost their jobs between March and August (Picture: PA)

Those on the scheme will receive 67% of their salaries, up to £2,100 a month, and must be off work for a minimum of seven days to be eligible.

Sunak said: ‘It will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.’

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