UK redundancies hit record high as Covid-19 drives up unemployment – as it happened

Graeme Wearden

from on 2020-12-15 17:22 (#5BNM7)

Rolling coverage of the latest economic and financial news

Labour: Winding down furlough scheme cost jobs
BCC: Furlough cliff-edge drove job losses up
Redundancies soared before u-turn on Job Retention Scheme
UK redundancies hit record 370,000 in last quarter
Unemployment rate rises to 4.9%; employment total down 144,000
Number of people on payrolls down 819k since February

5.21pm GMT

Time to wrap up.

The UK suffered a record number of redundancies in the last quarter as firms cut staff in the face of the pandemic, before the government's late u-turn to extend the furlough scheme.

5.04pm GMT

Fresh festive food worth millions of pounds - including whole turkeys, lobsters and truffles - could be heading for the bin as restaurants and bars in London and parts of the south-east move into tier 3 coronavirus restrictions from midnight, my colleague Rebecca Smithers reports.

4.51pm GMT

Optimism over the UK-EU trade talks, vaccines, US stimulus talks and politics all created a bullish mood today, says David Madden of CMC Markets

Micheal Martin, the Irish premier, said that he has greater hope for a UK-EU trade deal this week. The situation has yet to be resolved but it seems that things are heading in the right direction....

It is looking more likely that there will be a smooth transition of power from President Trump to President-Elect Joe Biden in January as the US Electoral College confirmed the Biden victory. Mitch McConnell, the Senate Majority leader, acknowledged the Biden win so that should help pave the way for the Democrat to move in to the white house in January.

4.47pm GMT

Britain's FTSE 100 has closed for the night, down 18 points or 0.28% at 6513, amid that late buzz of optimism over the Brexit talks.

The stronger pound pulled the index lower, weighing on multinationals such as pharmaceuticals firms Hikma (-2.7%) and GlaxosmithKline (-2.5%), and consumer goods maker Reckitt Benckiser (-2%).

4.22pm GMT

The pound just pushed higher, after Newsnight's Nicholas Watt tweeted that there's a Big buzz in the last hour' among Conservative MPs that the UK is heading towards a Brexit trade deal with the EU.

Big buzz in the last hour among Tory MPs that the UK is heading towards a Brexit deal with the EU. Eurosceptics being reassured they will be happy.

Nothing confirmed yet and MPs saying: many a slip between cup and lip. But MPs being told the signal will come if and when Jacob Rees-Mogg announces that the commons will sit on Monday and Tuesday next week. That would come before any UK / EU announcement

Interesting to see an informal cabinet push to reassure veteran Brexiteers. They are being told their concerns have been addressed. Key issue is over the level playing field - a mechanism in which EU and UK would observe common rules but in a way that would respect sovereignty

Brexiteers being reassured that the UK has seen off unilateral punishment by the EU if the UK diverges from EU standards in future - the lightening tariffs". They are being told UK has negotiated a joint dispute mechanism. That could lead to punishment if one side loses

4.10pm GMT

John Caudwell, the entrepreneur-turned-philanthropist who founded Phones4U, fear the UK unemployment total will hit 3m next year - once the furlough scheme ends.

Q3 set another record high for redundancies.

819k jobs have now been lost since the start of the pandemic. Well over half were in retail and hospitality, which will be even harder hit by London moving into Tier 3 and the certain job losses to come at Arcadia and Debenhams.

There's no doubt the unemployment rate - now 4.9% (up from 4.5% in Q2) and 1.7m people out of work (up from 1.4m) - will continue to rise.

I still expect numbers to hit 3m or more in the months ahead, once furlough ends again.

We will recover from this devastation if the Government put in place a far more ambitious, long-term job creation plan along the lines of #CaudwellPandemicRecovery, though, unfortunately, this will take several years.

I've outlined #CPR on my website https://t.co/Awa7ygfmst

3.12pm GMT

2.41pm GMT

Back in the UK, the NIESR thinktank has predicted that 2020 will be the worst year for total pay growth since 2009.

Having analysed this morning's unemployment figures, NIESR senior economist Cyrille Lenoel predicts that pay growth will falter this quarter, as England's November lockdown forces more companies to furlough staff.

Pay freeze for a large part of the labour force, in addition to lost income during the time spent in furlough have put more strain on the labour market than the modest rise in unemployment suggests. Even with rollout of an effective COVID-19 vaccine, the recovery in the labour market will take time".

OUT NOW: our latest #NIESRwage Tracker suggests that 2020 is shaping up to be the worst year for total pay growth since 2009

Read here in full: #labourmarket #paygrowth #wages https://t.co/1a6lhGm3wR

2.37pm GMT

Wall Street has opened higher, with the Dow Jones industrial average rising back over the 30k mark (which it smashed through last month for the first time).

The Dow has gained 177 points or 0.6% to 30,038, points amid hopes that a stimulus package could finally be agreed soon.

#DOW 30033.34 +0.58%#SPX 3674.18 +0.73%#NDX 12561.2 +0.79%#RTY 1930.87 +0.89%#VIX 23.17 -6.27%

Inevitable lockdowns should be the needle that breaks the stimulus stalemate's back. Congress will have to vote on two bills before the end of the week.

The first is a $748bn package that is mostly agreed upon covers additional unemployment benefits, rent assistance, and the extension of PPP. The second bill has all the sticking points, liability protection for businesses and aid for state and local governments. The government avoided a shutdown last week with a temporary funding bill that expires on December 18^th. Optimism is fairly high something will get done since Democrats seem willing to drop state and local aid for now.

2.30pm GMT

Growth across America's factory sector slowed last month.

The Federal Reserve reports that industrial output rose by 0.4% in November, down from 0.9% in October, while the narrower manufacturing output measure rose by 0.8%, down from 1.1% in October.

For some context here are the numbers just announced

US Industrial Production (MoM) Nov: 0.4% (est 0.3%, previous 1.1%)
US Capacity Utilization Nov: 72.8% (est 73.0% previous 72.8%)
US Manufacturing (SIC) Production Nov: 0.8% (est 0.3% previous 1.0%)

2.22pm GMT

Vaccine news: Moderna's Covid-19 vaccine has moved another crucial step closer to being authorised for emergency use in the US.

Staff of the Food and Drug Administration have reported that a two-dose regimen of Moderna's vaccine was highly effective , and also didn't flag any specific safety issues.

BREAKING: Moderna's COVID-19 vaccine is highly effective, FDA says, meaning Americans could soon have access to a second vaccine. @megtirrell has the details. https://t.co/NNHkVNK2zd pic.twitter.com/S6nAYMTdO6

Futures up on latest stimulus proposal and $MRNA +1% after getting approval from FDA staff before a final vote Thursday for its #COVID19 vaccine, with Moderna able to ship 6M doses initially, doubling Pfizer's first shipment #DOW +164

2.07pm GMT

UK bank Barclays has been fined 26m for treating more than 1.5 million struggling borrowers badly.

Barclays was found to have mistreated business and personal customers who were in financial difficulties and fell behind on credit card and loan payments between 2014 and 2018. The Financial Conduct Authority (FCA) said the bank failed to properly contact customers who fell into arrears and did not have appropriate conversations about their individual circumstances.

It meant the bank ended up offering struggling borrowers unaffordable or unsustainable payment plans that could put them under pressure to prioritise their Barclays debt over other key financial responsibilities such as their mortgage, council tax, child support or utility bills.

1.44pm GMT

In the markets, the pound has risen today amid hopes of a Brexit trade deal, after the UK and EU agreed on Sunday to keep negotiating.

Sterling is currently up over half a cent at $1.339, after a strong Monday which saw it soar by over two cents to $1.344, and then fall back somewhat.

The prime minister made clear that not being able to reach an agreement and ending the transition period on Australia-style terms remained the most likely outcome but committed to continuing to negotiate on the remaining areas of disagreement."

I think what we're seeing this week, having had a number of stalls in this process, is slow, but at the same time some, progress,"

My understanding is we're making some progress in that area (the level playing field). I think you can take it that because negotiating teams have gone really quiet here, that's an indication to me that there is a serious if difficult negotiation continuing. I'm still hopeful that can result in a successful outcome agreement."

1.01pm GMT

In other news... LoveHolidays, one of the UK's biggest online travel agents, has been ordered to refund 18m to more than 40,000 customers after their trips were cancelled due to the coronavirus outbreak.

Competition watchdog the CMA took action after hundreds of customers reported that they'd asked for a refund, but were told they would only get money back for their flights once the firm had received refunds from the airlines.

Online travel agents are legally bound to refund customers for package holidays cancelled due to coronavirus, regardless of whether or not the agent has received money back from suppliers, such as airlines.

LoveHolidays has now signed formal commitments that ensure customers get a full refund. More than 18m will be refunded to 44,000 customers. Of this, so far 7m has been returned to 20,000 customers.

12.23pm GMT

Could the surge in redundancies this year lead to a similar surge in claims for wrongful dismissal in 2021?

Julian Cox, employment law specialist and partner at law firm BLM, suggests that some companies may not have followed the proper procedures, following the shock of the pandemic.

Even with furlough payments still available until March, today's ONS figures show how the pandemic has played havoc with so many people's livelihoods. With much of the country in, or about to enter, tier three, these restrictions will only cause further devastation as staffing requirements continue to see a downward trend, particularly in the hospitality and retail sectors.

There's a worry that a rapid rise in unemployment could indicate many businesses may need to consider restructuring or be at risk of insolvency. There's also a concern over whether some businesses, who felt they have had to act swiftly to address their staffing levels to ensure survival, have handled redundancies and dismissals fairly, following proper procedures.

12.13pm GMT

Resolution have now done a very comprehensive Twitter thread about this morning's unemployment report:

Today's @ONS data showed the labour market continued to deteriorate before the second national lockdown, with unemployment rising to 5.2% in the single month of October. While low by historical standards, the OBR expects unemployment to rise sharply in the first half of 2021. pic.twitter.com/Js9Cvrqeis

Even more timely weekly data shows the unemployment rate rising through to the end of the month. The employment rate, on the other hand, is actually up slightly in the single month data, and fairly steady in the latest weekly data. pic.twitter.com/ZiB3yN9oV6

The number of paid employees has fallen by 819,000 since the pandemic, with the hard-hit hospitality sector accounting for around a third of this fall. Big drops are also seen in retail/wholesale, manufacturing, and leisure. pic.twitter.com/HEvMsRbkOi

Total hours worked have continued to recover in the three months to October, but were still 9.1 per cent lower than a year earlier. At their lowest point (Apr-Jun) they were down 20 per cent on the year. pic.twitter.com/KxinUznGTj

Apart from rising unemployment, the other grim statistic from this morning is that redundancies have reached a new record high of 370,000 in the three months to October. The more positive news is that the weekly data shows redundancies falling in the month of October. pic.twitter.com/qJ0VlXo3lH

Vacancies remain around a third down on pre-pandemic levels (in the three months to November). More worryingly, the single month data shows vacancies falling again in November, for the first time since May. pic.twitter.com/KSFEfxQXzG

While regular pay growth has continued - reaching 2.7 per cent in October in real terms - this is not as good as it sounds. A substantial amount of this pay growth is due to falling numbers of employees in low-paying jobs, which pushes up average pay for those still in work. pic.twitter.com/IxuwQuwKRG

Some of the industries hardest hit by the crisis are starting to see some pay recovery, possibly due to workers returning from furlough as well as compositional effects. Pay fell very slightly in retail, but grew in the hospitality and arts, entertainment and recreation sectors. pic.twitter.com/E6Mg4oPySF

12.02pm GMT

The pandemic has also hurt West End landlord Shaftesbury badly.

The pandemic has had a significant impact on our performance, particularly during the second half of the financial year, depriving our hospitality and retail occupiers of footfall and trade and resulting in reduced rent collections, increased vacancy, reduced occupier demand and a fall in property valuations.

Our key priority has been, and continues to be, supporting our occupiers through this period of disruption.

Rent collection rates have varied by use, with residential and office collections being higher than those for food, beverage and retail businesses which inevitably are more footfall reliant.

Restaurants on the estate had bought enough stock to see them through the festive season - some stockpiling in anticipation of supply chain disruption caused by Brexit.

A lot of that is just going to have to be thrown away," said Mr Bickell, who anticipates that Shaftesbury will have to keep supporting its tenants until next September.

11.09am GMT

The number of people being made redundant in the UK soared to a record high in October amid the second coronavirus wave and as the government scaled back its furlough scheme before an 11th hour extension, my colleague Richard Partington writes.

The Office for National Statistics said redundancies rose to 370,000 in the three months to October, fuelled by job losses in retail and hospitality, during a period when the flagship wage subsidy scheme became less generous and was due to close at the end of the month.

11.09am GMT

More than half of furloughed jobs in the UK are at the highest risk of automation as the Covid crisis accelerates workplace technology change, driving up redundancies and inequality across the country, according to a report published today.

The two-year commission on workers and technology, chaired by the Labour MP Yvette Cooper, found that workers in sectors hit hardest by the pandemic - such as hospitality, leisure and retail - face a double whammy" as their jobs are at the most risk of being replaced by machines.

10.48am GMT

Anneliese Dodds MP, Labour's shadow chancellor, has blamed the record level of redundancies this autumn on Rishi Sunak's irresponsible decisions' which created a furlough scheme cliff edge' this autumn.

Dodds says that winding down the furlough scheme during September and October put businesses under pressure.

It's no coincidence that redundancies rocketed to record levels when the clock was ticking down to the Chancellor's furlough cliff edge and rising employer contributions were putting businesses under pressure.

The Chancellor's irresponsible decisions haven't just cost jobs - they've left us in the worst recession of any major economy. It was his decision to wind down the furlough scheme before we were out of this crisis, and his decision to wait until the last possible minute to change course.

He can't put people through the wringer like this again. Employers can't afford to wait until the last minute again for this Chancellor to decide what happens to the furlough scheme at the end of January. They need clarity now."

9.53am GMT

Poorest families are suffering the brunt of the pandemic job losses, points out Rebecca McDonald, senior economist at Joseph Rowntree Foundation:

That's because workers in the sectors worst affected (hospitality, accommodation) were already relatively poorly paid, so some would already have been in poverty before the pandemic.

News today that unemployment rate has risen further to 4.9% Aug-Oct (and a 5.2% estimate just for Oct suggests things worsening) - not surprising but a monthly reminder of the v real fallout of Covid on people's livelihoods. Big concern is who is losing their jobs...

... Job losses consistently focused on low-paid sectors where many workers are trapped in poverty. We now know that more than a third of drop in employment since Feb has come from hospitality - the sector where nearly a quarter of workers were living in poverty before Covid hit

Despite this deeply worrying context, where those with the least are being hit hardest, the Chancellor is still planning to end the 20 uplift in UC next April (when unemployment is projected to be much higher still)

Pulling this lifeline from millions of families will pull many deeper into poverty, but it will also further weaken a struggling economy. The Chancellor should commit now to #KeepTheLifeline and extend the same vital support to those on legacy benefits

9.44am GMT

In a further blow, the number of people on company payrolls kept falling in November.

The ONS's early flash estimate suggest that the number of payrolled workers fell by around 28,000 last month, when England was in lockdown, there were curbs in Scotland, and Wales was emerging from a firebreak.

9.25am GMT

Nye Cominetti, senior economist at the Resolution Foundation, fears that unemployment will keep rising into 2021... even though the furlough scheme has prevented wider job losses.

The labour market continued to deteriorate as infections grew - and restriction increased - in the run-up to the second lockdown. Hospitality continues to be worst affected by Britain's jobs crisis."

The extension of jobs support schemes will have protected millions of jobs and kept a lid on rising unemployment over the winter. But with vacancies still a third down on pre-crisis, and significant social distancing restrictions likely to be required well into 2021, unemployment will continue to rise in the new year.

Record rise in redundancies in the run-up to second lockdown - @nyecominetti on today's @ONS labour market statistics https://t.co/jRwhmbhN8j pic.twitter.com/3t58JebnUx

9.21am GMT

Today's jobs report also shows that unemployment climbed during the last quarter.

In October alone, the ONS estimates that the UK jobless rate hit 5.2%, up from 4.9% in September, 4.8% in August, and 4.6% back in July.

For much of the period covered by Tuesday's data, finance minister Rishi Sunak rejected calls to extend his broad job retention scheme beyond a scheduled October 31 expiry, raising fears of an acceleration in job losses.

But, as a second wave coronavirus cases hit the country, Sunak was forced to announce a last-minute, one-month extension of the scheme, which he quickly extended again until the end of March 2021.

Some context for today's UK #unemployment data

Single-month estimate for October was 5.2%, compared to average of 7.6% in EU and 8.4% in eurozone... pic.twitter.com/uJtpZrJqPP

9.21am GMT

Although vacancies have picked up from their spring slump, there are much fewer opportunities for work than before the pandemic.

The ONS estimates there were 547,000 vacancies in September to November - a quarterly increase of 110,000 vacancies, and 203,000 more than the record low in April to June 2020.

8.53am GMT

TUC General Secretary Frances O'Grady says the government must provide more support to people in jobs, and boost the benefits available to those who are out of work.

We are staring down the barrel of mass unemployment. There's no time left to waste.

Ministers must step up and create jobs. We could create 1.8 million new jobs in the next two years in green transport and infrastructure, and by unlocking public sector vacancies.

8.44am GMT

Tej Parikh, chief economist at the Institute of Directors, also blames the government's plan to unwind the furlough scheme over the autumn (before that early November u-turn), just as the second wave of Covid-19 struck.

He says:

The pandemic took its toll on the jobs market in the Autumn.

The unwinding of the Job Retention Scheme pushed up redundancies as firms struggled amid Covid-19 restrictions. The subsequent extension of furloughing will provide a lifeline for many jobs over the difficult winter months, but the big question is what happens after.

While the roll-out of the vaccine has buoyed employers, it won't automatically undo the damage done to their businesses by the pandemic. Hiring plans for next year remain stuck in neutral with many firms needing to tend to damaged balance sheets. To avoid a further uptick in unemployment at the end of Q1, the Treasury should consider measures to encourage job creation.

A relief for employers' national insurance contributions for example could ease cashflow difficulties and put the jobs market in a stronger position come the end of the furlough scheme. It's crucial that March doesn't become another cliff-edge, business leaders have already seen far too many of those of late.

8.35am GMT

Minister for Employment Mims Davies MP says:

It's been a truly challenging year for many families but with a vaccine beginning to roll out with more perhaps to follow and the number of job vacancies increasing there is hope on the horizon for 2021.

Our Plan for Jobs is already helping people of all ages into work right across the UK, with increased Jobcentre support, new retraining schemes, new job placements like Kickstart for our young people and more to come as we are determined to build back better."

Our 30 billion #PlanForJobs is protecting, supporting and creating jobs." - @mimsdavies

Now we have help for people of all ages, as they look for work - including through the #Kickstart Scheme, our JETS programme, and by doubling the number of Work Coaches. pic.twitter.com/rR393DwiiT

8.23am GMT

The surge in redundancies in August to October shows that companies were cutting staff because they expected the furlough scheme to end, before chancellor Rishi Sunak eventually extended it into March 2021.

The Job Retention Scheme (which covered up to 80% of the wages of furloughed workers) had been due to finish at the end of October, and be replaced by the less generous Job Support Scheme.

The latest data confirms that coronavirus continues to weigh heavily on the UK labour market. The re-introduction of tighter restrictions and the expected cliff edge caused by the original furlough scheme end date in October helped drive record redundancies.

While the furlough scheme will help safeguard many jobs over the winter months, with businesses facing the prospect of further restrictions and a messy end to the Brexit transition period, major job losses remain probable in the near term.

The rise in the unemployment rate from 4.8% in September to 4.9% in October suggests that the previous phasing out of the furlough scheme continued to take a gradual toll, which will continue over the coming months.

7.57am GMT

Matthew Percival, CBI Director of People and Skills, says:

Another bleak set of figures this month, with a steep rise in unemployment and more redundancies showing households were still being hit hard, even ahead of England's second national lockdown.

While news of a vaccine has provided hope, many firms are still finding it difficult to operate within the toughest Covid restrictions.

7.57am GMT

Darren Morgan, the ONS's director of economic statistics, says today's data show a further weakening' in the UK labour market, with hospitality hit particularly hard:

Commenting on today's latest data, ONS director of economic statistics Darren Morgan said: (1/3) https://t.co/DZjeaX7emH pic.twitter.com/NDtYfBKD4B

Darren Morgan also said: (2/3) https://t.co/DZjeaX7emH pic.twitter.com/jT9SPO6HHb

Darren Morgan continued: (3/3) https://t.co/DZjeaX7emH pic.twitter.com/yI4Jbarnso

7.47am GMT

7.46am GMT

Here's Sky's Ed Conway on the jump in redundancies:

The most striking chart from today's UK labour market statistics. Just look at the jump in redundancies: far bigger than after the financial crisis. And note this is yet to reflect many of the high street job losses of recent weeks. pic.twitter.com/hBJ48GPJEk

7.41am GMT

Alex Collinson of the TUC has more details on the surge in redundancies:

New labour market data: 370,000 redundancies in Aug-Oct 2020.

A record high, higher than any three-month period during the recession, and a 212% increase on the same period last year. pic.twitter.com/qjtkbQ8Lx7

The massive rise in redundancies has affected all age groups.

But those aged 25-34 particularly affected - a shocking 343% increase in redundancies if you compare Aug-Oct 2020 to the same quarter in 2019. pic.twitter.com/Y9EXn17oFN

7.22am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain's jobs crisis has worsened, as companies continue to lay people off as the Covid-19 pandemic hits the economy.

August to October 2020 estimates show a large increase in the unemployment rate and a record number of redundancies, while the employment rate continues to fall.

This quarterly decrease was mainly driven by men in employment, the self-employed and part-time workers, but was partly offset by an increase in full-time employees.

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