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British Companies Fear Rising Unemployment Numbers

The number of new job losses across the UK has led to fears that the unemployment numbers will continue to break records while we wait for the economic recovery to take place. This isn’t just a British issue though, as most countries are now seeing the damaging effects of the lockdown in their economies.

The Latest Numbers

In the last few days, the UK has seen an increase in the number of job losses suffered. Over 12,000 people fell out of employment in just 48 hours, as more companies feel the effects of the struggling economy and lower consumer demand.

This led to Prime Minister Boris Johnson pleading with the nation’s employers to 'wait for times to get better' rather than cutting back on staff now. He encouraged them to carry on using the furlough scheme while they wait for things to improve.

Among the sectors cutting back on staff numbers were retail giants and food outlets. In retail alone, over 6,000 jobs were lost from the country’s high streets in one day. This is likely to add to the recent increase in the number of companies using debt collection agency services.

Worryingly, numbers show that more shops have already entered administration in 2020 than in all of 2019. A total of 2,123 stores run by 38 companies entered administration in the first half of this year, causing 49,200 job losses. This compares to 2,051 stores from 43 retailers and 45,500 jobs in 2019.

It is feared that the retail and hospitality industries will continue to suffer job losses in the next few months. From August, companies will need to begin to contribute to the cost of the furlough scheme, putting additional pressure on their stretched resources.

A similar story can be seen across most of the planet, although there are some signs that the worst may be over. In the Eurozone, unemployment rose to 7.4%, which was better than the 7.7% expected. In the US, the latest jobless figures are eagerly awaited after a record uplift in new job creation showed that the country may have turned the corner.

What Are Businesses Saying?

A survey carried out by the Bank of England asked a group of chief financial officers about what they think the future holds. The results show that they are more pessimistic about unemployment than they were a month ago.

The respondents were from a mixture of small, medium and large companies. They revealed that they expect unemployment to grow by 11% by the end of 2020. Last month, the results of this survey showed that they believed it would be a 10% increase.

Companies also reported that they are reducing investment plans, with the expectation that sales will gradually improve throughout the remainder of the year. The June DMP survey results highlighted that businesses are planning for a drop in sales of 38% for the second quarter, compared to what they would have been without the Covid-19 pandemic.

They also put a figure of 8% on the expected drop in employment in the second quarter, and a 38% decrease in investment levels.