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Sunak 'cautiously optimistic' about job market as furlough ends

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Sunak 'cautiously optimistic' about job market as furlough ends
UK chancellor Rishi Sunak said that he was 'encouraged' by job retention numbers so far. Photo: AP

Chancellor Rishi Sunak said that he is "cautiously optimistic" about the state of the UK jobs market on Tuesday, and that, despite the fact we do not have perfect data so soon after the end of the scheme, the information so far had been broadly positive. 

Speaking at an Economic Affairs Committee hearing, Sunak said that he was "encouraged" by what the Treasury is able to track — with informal surveying returning anecdotally positive results and job retention numbers so far remaining fairly high. 

There were around 1 million people on the tapered furlough scheme by the time it wound down at the end of September and the Treasury said it has not seen an uptick in redundancy notices. 

The chancellor also noted record numbers of job vacancies and healthy ratios of unemployed people to those vacancies. 

Read more: UK jobs recruitment drive falls short of diversity and inclusion targets

The chancellor said that he had spoken to former German economic minister Olaf Scholz when designing the furlough scheme but the UK wouldn't look to emulate the German jobs model as we come out of the pandemic. 

Sunak also said that corporate insolvencies were lower during COVID than the year before due to government support as well as a relaxing of rules.

Sunak also said that the Treasury had not seriously considered altering the remuneration of bank reserves at the Bank of England. 

He said that changing the remuneration of reserves at the central bank would impair monetary policy transmission. 

The comments come following a warning to the chancellor that he has very limited room for manoeuvre in his efforts to restore budgetary discipline before the next general election, especially in the face of an interest rate rise.

Read more: Budget 2021: Sunak resets UK's spending focus for a post-COVID economy

Richard Hughes, head of the Office for Budget Responsibility, told the Treasury committee on Monday that "the headroom he set aside to reach those targets is the second-lowest headroom that any chancellor has had when setting fiscal rules." 

He added that just a 1% rise in rates would wipe out the chancellor's headroom and that monetary policy also posed a threat. 

Watch: What is inflation and why is it important?

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