Employment is set drop 10% in 2020 due to the COVID-19 pandemic, and it probably won’t bounce back for at least a year.
In the Bank of England’s monthly survey, UK firms said employment was likely to be 6% lower than expected between April and June this year.
This is is better than what the Bank predicted a month earlier, when it had put the figure at 18%. However, employment is expected to continue to fall, until the end of 2020 when it could be down by as much as 10%.
Businesses reported over a third (36%) of employees had been furloughed in May, the same figure as in April.
As a result, jobs are only 6% down on the levels businesses would usually expect at this time of year. But a huge number of job losses are still on the way after the furlough scheme ends in October.
So far, the information and communications industry is the hardest hit, with employment 11% lower than it would otherwise have been.
But it is set to be overtaken by accommodation and food in the autumn – down 18% in the third quarter of the year and 22% by the end of the year.
Businesses are expecting it to take longer for things to get back to normal. In April, the most common month businesses expected normality to return was September 2020. By May, it had shifted to a point after April 2021.
Sales have also fallen dramatically – down 42% from the levels that had been expected between April and June. Recovery will be painfully slow, businesses predict – and will still be down 10% in early 2021.
Meawhile, investment has also dropped off a cliff, down 43% from expected levels. Its recovery is expected to be even slower, still be down 18% from expected levels by the start of 2021.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Government schemes have held back a wave of redundancies, but as the furlough scheme is gradually eroded, job losses will break through.
“It means we need to learn to live with insecurity for months to come. This is always less painful and stressful if we know we have a savings safety net to fall back on.
“Ideally we need one to three months’ worth of expenses in an emergency account. But at this stage, whatever you can set aside now will help you get through the uncertainty that lies ahead.”