Britain could be set for smaller jobs crisis than recessions

29 September, 2020 12:00 AM printer

LONDON: Governments across Europe face a hard balance between public health and economic activity as they combat a resurgence in COVID-19 cases.

Last week’s decisions by the UK illustrate those trade-offs. New restrictions will slow the pace of the recovery. Despite the opposition last week’s announcements have provoked, they may not go far enough. According to The Times last week, Chris Whitty, the chief medical officer, thinks the new restrictions will be insufficient to control the surge in cases and “tougher action is inevitable”.

Against this backdrop, and with unemployment set to rise, the chancellor of the exchequer Rishi Sunak last week announced measures to support the jobs market once the Job Retention Scheme (JRS), widely known as the furlough scheme, comes to an end on 31 October, report agencies.

The JRS has significantly reduced the immediate damage to jobs from the lockdown. The scheme has supported over nine million jobs, or nearly 30 per cent of the workforce. Unemployment currently stands at 4.1 per cent, just 0.3 per cent above the 45-year low reached in February. This is remarkably low given that the economy shrank by a quarter during lockdown, and GDP is still 12 per cent below pre-crisis levels in July.