Libby McCaughey
8 months ago by Libby McCaughey

Uncertainty ahead as furlough scheme ends

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The furlough scheme closed last Thursday, leaving those who have not yet fully returned to work feeling uncertain about their futures.

At the end of September, it was estimated that nearly one million workers were expected to be on the scheme, according to research by the Resolution Foundation.

Since the beginning of the pandemic, the furlough scheme has helped pay the wages of 11.6 million workers. But many are expecting a small rise in unemployment as it draws to an end ends.

The chancellor said he was "immensely proud" of the near £70bn scheme, but now was the right time to close it, despite calls for further support from some “badly hit” companies.

Fidelity International's investment director, Maike Currie, told the BBC that "no-one really knows what is next", although the end of the scheme comes amid a record number of job vacancies.

"I think what we can be certain of is that we'll see under-employment, where employees return to work but possibly not on a full-time basis and that they might need to supplement their income."

Latest official figures show the UK's economy grew by 5.5% between April and June - revised up from the initial estimate of 4.8%.

The uplift was largely driven by household spending rebounding after lockdowns, although many firms are now being held back by current labour shortages.

"Any hope that the end of the furlough scheme might be the magic wand to solve the supply chain crisis is likely to be wishful thinking," said Susannah Streeter, from Hargreaves Lansdown.

There is likely to be a big mismatch of skills and experience between those leaving the furlough scheme and the jobs on offer, she added.

Chief Secretary to the Treasury Simon Clarke told the BBC: "We think there are probably two million fewer people unemployed than would have been the case if this scheme hadn't been introduced.

"I think it's done an enormous amount to shield our economy and our society from the worst of Covid."

The scheme has also been praised by the Resolution Foundation think tank as a "great success".

But the foundation's recent research suggested that a small rise in unemployment was a "real risk" for those still on the scheme as it ends, particularly older workers or those in the travel sector.

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Information Sourced from BBC