U.K. job cuts jumped the most on record in the three months through August even as lockdown eased, raising concern that the worst is yet to come. The number of redundancies climbed 114,000 in the June-August period, the most since 1995, the Office for National Statistics said Tuesday. That left the total at 227,000, a rate of more than 8 per 1,000 employees.
Jobs Hit
Redundancies have surged in the U.K. in recent months
Source: Office for National Statistic
Meanwhile, employment fell by 153,000, almost five times the level estimated by economists, and the jobless rate rose to 4.5%, the highest since 2017.
Combined with the prospect of a no-deal departure from the European Union’s single market at the end of the year, pressure is mounting on the government and the Bank of England to do more to support the economy. Economists expect the BOE to expand its bond-buying program as soon as November.
Employers hit by the pandemic will see wage subsidies for furloughed workers end this month. Few think its replacement or other newly announced support for firms affected by local lockdowns will be enough to avert mass job losses, with some predicting unemployment could surpass 3 million – levels not seen since the 1980s.
What Our Economists Say:
“Cracks in the U.K.’s labor market widened in August. But the big test will come at the end of this month when the furlough scheme ends. The government decision to introduce less generous, more targeted support in the face of tightening restrictions and a rising caseload creates further downside risks, in our view. We expect unemployment to spike sharply in 4Q and see the Bank of England easing policy next month.”