Now Businesses are already letting people go, and the experts have now thought the figure is set to soar as the crisis tears through Britain. According to a leading labour economist, Rishi Sunak’s wage subsidy scheme to preserve jobs could ‘face a mighty headwind’.
Almost two million UK jobs could be lost as a result of the most devastating Covid-19 outbreak despite the Chancellor Rishi Sunak’s vast wage subsidy scheme, experts said.
Economists are indicating that hundreds of thousands of job losses which could push the unemployment rate from the current 3.9pc closer directly to the 8pc seen in the aftermath of the so called financial crisis. The jobless count which is currently 1.4m, which peaked at 2.5m in early 2010.
A veteran labour economist, John Philpott, at the Jobs Economist consultancy, said: “Two million job losses looks virtually certain but I worry as it won’t be much lower even with some kind of generous wage subsidy. As every day goes by, the scale of the demand hits starts to look worse and worse”, so he fears that even a good policy response will face a mighty headwind.
Moving ahead,we have David Page, the chief economist at AXA Investment Management, who said: “Authorities are working hard to basically avoid an adverse scenario in the labour market in near future, but if I am to talk about the move towards 8pc which isn’t something they would rule out considering the unprecedented nature of the shock.”
Mr Rishi has been warned his unprecedented support package for basically the workers could have unintended consequences.
On Friday, this Chancellor pledged to pay up to 80pc of wages and some £2,500 per month to staff not working to keep them in their jobs. The support package will be available to the workers of the company, for the Treasury’s Coronavirus Job Retention Scheme, which is supposed to be up and running within the upcoming weeks.
However, the Institute for Fiscal Studies raised concerns on the design of the package to mainly protect the workers, warning it could encourage and enhance the businesses to temporarily lay off staff.
Paul Johnson said on that day, “This policy gives a very clear incentive to furlough half of them and keep half of them on full time,” the influential think tank’s director. He added that the policy had clearly been “designed in haste” and would be difficult for the police.
If 10pc of Britain’s workforce gets affected, the measures would cost around £10 billion over three months, this is what the IFS calculated.
Experts have also warned that the job losses will be exacerbated by the severe impact on staff-intensive consumers who are facing the industries against the backdrop of an economy facing the potential double-digit reduces during the next 04 months. Neil Shearing said that “Leisure, retail and travel will bear the brunt,”chief economist at Capital Economics.
Following Mr Sunak’s rescue package, the Capital revised down its estimate of the unemployment rate spike to 6pc – although there is a rise to this level, which would still entail around 6 lakh job losses. At JP Morgan, the economists, using internet searches, explain and suggest that there have already been around eighty thousand redundancies in the UK as a result of the outbreak.
Not only the schools are closed across Britain and are expected to deal with another blow to the economy whereas millions of workers will be forced to look after the children.
More than 6pc or 2 million people, of the workforce, are likely to be put out of action just to make sure and to take care of children, according to Samuel Tombs, one famous economist at Pantheon Macro.
He added in the closures a “gamechanger for the supply chain and the labour supply” that will “greatly enhance the economic damage”.
With Wall Street analysts predicting an annual hit even greater than the financial crisis, in the last week, economists have delivered huge downgrades for the UK economy.
Morgan Stanley has already warned that the GDP will tumble 5.1pc in the year 2020, following a deep recession in the first half of the year. Along with that, a strong second half rebound would not prevent the worst recession in a century.
Efforts made by the governments to mitigate the economic fallout of the outbreak are expected to somewhat push deficits to the levels last seen during the financial crisis. Economists at the Capital Economics, warned that the UK deficit will widen to at least 8pc of GDP in the year 2020-21 as tax receipts plunge and the government props up the workers and businesses.
Ultimately it is the Government’s advice which must be followed to keep oneself protected from every situation in this hard time. One should pray to god and should believe in “United we stand and Divided we fall”. So be safe and be at home.