LONDON (BLOOMBERG) - The UK will see more than twice as many job losses in the coming months than in the recession following the financial crisis, underscoring the bleak outlook for the labour market.
Around 450,000 roles look set to be terminated in the autumn, according according to analysis by the Institute for Employment Studies. That was based on notifications to the government's Insolvency Service, which employers are legally required to file if they plan to cut at least 20 positions.
The figures are a stark reminder of the difficulties facing businesses after months of restrictions to slow the spread of Covid-19. The end of state wage support measures looks likely to unleash a wave of job cuts, exacerbating the sharpest economic contraction in centuries.
Finance minister Rishi Sunak is facing growing calls from industry groups and fellow lawmakers to extend the furlough programme, under which the government has paid as much as 80 per cent of the wages of some 9.6 million workers. It is due to be wound down altogether at the end of next month.
Yet he faces spiraling costs from crisis measures that have seen government debt balloon to over £2 trillion (S$3.5 trillion) for the first time. The Bank of England's chief economist Andy Haldane threw his weight behind the the plan to let the program meend, saying that prolonging it could delay a much-needed restructuring.
"The sad reality is that this restructuring cannot be averted entirely, but we can do a lot more to minimize the job losses," said Institute for Employment Studies director Tony Wilson. "Viable businesses cannot bring people back because of the ongoing disruption caused by the pandemic. We need tightly targeted support to help these firms."