We are going into a second lockdown, and the economic environment just got worse.
The impact of these lockdowns has decimated earnings and demand. Businesses are at the edge, and the lockdown is about to demonstrate its greatest King Leonidas impression.
What’s happening with jobs?
Jokes aside, more than 2 million people claimed unemployment benefit in September 2020. The Covid-19 pandemic has taken almost 750,000 jobs from the UK economy, and left manny Brits off the payroll.
In the previous quarter alone redundancies increased by 114,000 to 227,000, which is a level not seen since the 2008 financial crisis. Let’s also note that redundancies peaked around 311,000 during that time.
But is this just the beginning?
The furlough scheme has now been extended till the end of November. The latest data on the labour force cannot add those yet to return from furlough “as such aren’t classified as unemployed quite yet,” a chief market analyst said.
The claimant count – those who claim government benefit – rose 120.8% in March to reach 2.7 million in August.
At the base we have small businesses under immense pressure, many are paying out of pocket for rent, utilities, staff (or furlough), and the revenue has depreciated. The decrease in the volume of customers on the high street has forced closures, and pushed some to the brink of bankruptcy.
In the middle we have government with some headwinds – internal conflict, disjunction between the public and the MPs, and Brexit is just around the corner (deal or no deal, who knows?). The government’s restriction announcements provide little room to manoeuvre, and creates an uncertain future to plan for.
At the top is a virus which kicked off the started of the biggest recession we’ve seen since 2008. A potential second wave and a second lockdown both impacting our work and consumption.
Where do we go from here?
The government’s track-record during this pandemic has not been good when it comes to information. Who’s to say the 4-week lockdown doesn’t get an extension if things get worse?
The major concern for the British economy is the post-covid world we will inherit after the lockdown. When does demand pickup to save the high street, or will we say goodbye all together? Surely, we are still in the early stages of this recession and further news is to come.
Food for thought:
- What happens when furlough ends?
- How will rents be paid? (Business and Commercial)
- Possible insolvency crisis
There’s roughly 9.6 million jobs on furlough right now. It’s too early to predict how many will still have a job to return to if Covid restrictions extend into next year, and furlough ends.