Job fears as more than one in 10 workers are still on furlough
The figures comes from a twice monthly survey in which the ONS studies coronavirus and the latest indicators for the UK economy and society.
It found the proportion of working adults who travelled to work at some point during the week fell to 59%, from 64% the previous week, following an announcement by the government that people should work from home where possible.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says: ‘’Hopes of sustained economic recovery for the UK have taken a blow with fresh indications of the likelihood of mass jobs losses in the months to come.
“The ONS report showing that 11% of the UK workforce are partly or fully on furlough suggests that millions of jobs are still at risk given that the scheme will end in less than a month’s time.
“Although the job retention scheme will be replaced by a subsidy for workers on reduced hours, a large number of firms may not be in a position to pay even part time wages, if consumer demand doesn’t pick up more swiftly.”
Meanwhile the Bank of England’s Decision Maker Panel (DMP) survey, which questions decision makers at small and medium-sized businesses, found that Covid-19 was expected to lower employment by 8% in Q3 2020 and 9% in Q4 2020, relative to what it would have been.
Businesses estimated that their sales in Q3 2020 would be 14% lower than they would otherwise have been because of Covid-19.
This represents a significant improvement from -30% in Q2. But less recovery was expected over the next two quarters. The impact of Covid-19 on sales was expected to be -14% in Q4 2020 and -12% in Q1 2021.
Streeter says: “Instead of keeping on workers, the indications from the Bank of England are that businesses are battening down the hatches and expecting to cut both jobs and investment. The chief financial officers questioned as part of the bank’s decision maker panel survey said that they expected Covid-19 to reduce employment by 8% in the third quarter and by 9% in the fourth. They also expected investment to fall by 21% in the third quarter before gradually recovering.
“Worries about Brexit are also increasingly playing on the minds of company bosses. The percentage of firms reporting that Brexit was in their top three sources of uncertainty increased from 47% in October to 52% in September.
“The double whammy of Brexit and Covid 19 is clearly increasing anxiety among the UK’s business community and there is a big risk that by hunkering down this winter and tightening the purse strings, cuts to workforces and investment could lead to a spiralling down of consumer demand and make the recovery longer and harder.’’