Yahoo Finance UK economic revival under way but jobs concerns grow
Britain’s economy has begun to repair the damage from the coronavirus lockdown as restrictions are gradually lifted, despite mounting concern over the long-term damage to the jobs market, according to a Guardian analysis.
As the government prepares to scale back the furlough scheme from 1 August, the Guardian’s monthly tracker of economic news suggests the hit to employment and household finances is gathering pace. However, the easing of lockdown is enabling business activity and retail sales to return close to pre-pandemic levels, despite severe pressure remaining for the hardest-hit sectors of the economy.
Related: UK's full economic recovery could take until 2024, says EY report
In a warning over the country’s future growth prospects, Howard Davies, the chairman of NatWest Group, said the recovery could run out of steam this winter as government support was gradually removed.
Writing in the Guardian, the head of the majority state-owned lender, which also owns the Royal Bank of Scotland brand, said: “We cannot assume the spending recovery we have seen so far will persist into the autumn. There is a risk that the prospect of job losses will dampen spending.”
The Guardian has chosen eight economic indicators, as well as the level of the FTSE 100, to track the impact of Covid-19 on jobs and growth and the measures used to contain it. Faced with the deepest global recession since the 1930s Great Depression, the coronavirus crisis watch will also monitor how the UK is faring compared with other countries.
The coronavirus lockdown has prompted some of the UK’s most prominent companies to announce large-scale job losses. The aviation, automotive and retail sectors have been among the worst hit, as businesses adjust to dramatically reduced revenue projections.
While the government’s job retention scheme has so far protected millions of jobs, fears are mounting that unemployment will rise as the scheme begins to be phased out from August.
Since lockdown began on 23 March, some of the UK’s largest companies have announced plans to cut a total of 60,000 jobs globally, many of which will fall in the UK.
Marks & Spencer – 950 jobs
20 July: The high street stalwart cuts management jobs in stores as well as head office roles related to property and store operations.
Ted Baker – 500 jobs
19 July: About 200 roles to go at the fashion retailer’s London headquarters, the Ugly Brown Building, and the remainder at stores.
Azzurri – 1,200 jobs
17 July: The owner of the Ask Italian and Zizzi pizza chains closes 75 restaurants and makes its Pod lunch business delivery only
Pizza Express – 1,000-plus jobs
16 July: The restaurant chain plans the closure of 75 restaurants as part of a rescue restructure deal.
Burberry – 500 jobs worldwide
15 July: Total includes 150 posts in UK head offices as luxury brand tries to slash costs by £55m after a slump in sales during the pandemic.
G4S – 1,150 jobs
13 July: The security company G4S plans to make 1,150 workers redundant as it scales back its struggling cash handling business and contends with pandemic-hit cash usage.
Boots – 4,000 jobs
9 July: Boots is cutting 4,000 jobs – or 7% of its workforce – by closing 48 opticians outlets and reducing staff at its head office in Nottingham as well as some management and customer service roles in stores.
John Lewis – 1,300 jobs
9 July: John Lewis announced that it is planning to permanently close eight of its 50 stores, including full department stores in Birmingham and Watford, with the likely loss of 1,300 jobs.
Celtic Manor – 450 jobs
9 July: Bosses at the Celtic Collection in Newport, which staged golf's Ryder Cup in 2010 and the 2014 Nato Conference, said 450 of its 995 workers will lose their jobs.
DHL – 2,200 jobs
7 July: Some 2,200 UK logistics workers involved in making Jaguar Land Rover vehicles are set to lose their jobs. About 40% of DHL's staff employed on the contract for the carmaker.
Reach – 550 jobs
7 July: The owner of the Daily Mirror, Daily Express and Daily Star newspapers is to cut 550 jobs, 12% of its workforce, amid reduced demand for advertising in its titles.
Pret a Manger – 1,000 jobs
6 July: Pret a Manger is to permanently close 30 branches and could cut at least 1,000 jobs after suffering “significant operating losses” as a result of the Covid-19 lockdown
Casual Dining Group – 1,900 jobs
2 July: The owner of the Bella Italia, Café Rouge and Las Iguanas restaurant chains collapsed into administration, with the immediate loss of 1,900 jobs. The company said multiple offers were on the table for parts of the business but buyers did not want to acquire all the existing sites and 91 of its 250 outlets would remain permanently closed.
Arcadia – 500 jobs
1 July: Arcadia, Sir Philip Green’s troubled fashion group – which owns Topshop, Miss Selfridge, Dorothy Perkins, Burton, Evans and Wallis – said in July 500 head office jobs out of 2,500 would go in the coming weeks.
SSP Group – 5,000 jobs
1 July: The owner of Upper Crust and Caffè Ritazza is to axe 5,000 jobs, about half of its workforce, with cuts at its head office and across its UK operations after the pandemic stalled domestic and international travel.
Accenture – 900 jobs
1 July: The New York-listed consultancy firm is making 900 job cuts at all levels across 11,000 UK employees in the face of lower demand for its services.
Harrods – 700 jobs
1 July: The department store group is cutting one in seven of its 4,800 employees due to the “ongoing impacts” of the pandemic.
Airbus – 1,700 jobs
30 June: The European planemaker announced plans to cut 15,000 jobs, including 1,700 in the UK, as it warned the coronavirus pandemic had triggered the “gravest crisis” in its history.
Harveys – 240 jobs
30 June: Administrators made 240 redundancies at furniture chain Harveys with more than 1,300 jobs at risk if a buyer cannot be found.
TM Lewin – 600 jobs
30 June: Shirtmaker TM Lewin closed all 66 of its outlets permanently with the loss of about 600 jobs.
Royal Mail – 2,000 jobs
25 June: Royal Mail has announced a cost-cutting plan that will involve slashing about 2,000 jobs, or one in five of its near-10,000 management roles.
Swissport – 4,500 jobs
24 June: Swissport, which handles passenger baggage and cargo for airlines, has begun a consultation process to make 4,556 workers redundant, more than half of its 8,500 UK workforce.
Jaguar Land Rover – 1,100 jobs
15 June: The UK’s largest car producer has cut 1,100 contract workers at manufacturing plants in Merseyside and the West Midlands.
Travis Perkins – 2,500 jobs
15 June: The builders’ merchant, which is behind DIY retailer Wickes and Toolstation, is cutting 2,500 jobs in the UK, accounting for almost a 10th of its 30,000-strong workforce.
Centrica – 5,000 jobs
11 June: The owner of British Gas announced in June that it intends to cut 5,000 jobs - a quarter of its UK workforce - in mostly senior roles, and remove three layers of management.
Johnson Matthey – 2,500 jobs
11 June: The chemicals company, a major supplier of catalytic converters for cars, plans to make 2,500 redundancies worldwide over the next three years, 17% of its workforce.
Bombardier – 600 jobs
11 June: The Canadian plane maker will cut 600 jobs in Northern Ireland, as part of 2,500 redundancies announced in June.
Monsoon Accessorize – 545 jobs
11 June: The fashion brands were bought out of administration by their founder, Peter Simon, in June, in a deal which saw 35 stores close permanently and led to the loss of 545 jobs.
BP – 2,000 jobs
8 June: The oil company said in June it plans to make 10,000 people redundant worldwide, including an estimated 2,000 in the UK mostly in office roles, by the end of the year.
Mulberry – 470 jobs
8 June: The luxury fashion and accessories brand said in June it is to cut 25% of its global workforce and has started a consultation with the 470 staff at risk.
Bentley – 1,000 jobs
5 June: The Crewe-based luxury carmaker intends to shrink its workforce of 4,200 by almost a quarter, slashing 1,000 roles through a voluntary redundancy scheme.
Aston Martin Lagonda – 500 jobs
4 June: The Warwickshire-based luxury car manufacturer, struggling even before the pandemic, has announced 500 redundancies.
Lookers – 1,500 jobs
4 June: The car dealership chain said it plans to cut 1,500 jobs and close 12 dealerships just days after car showrooms were allowed to reopen in England.
Rolls-Royce – 9,000 jobs
3 June: The jet-engine manufacturer has confirmed that 3,000 job cuts, of a planned 9,000 worldwide, will be made in sites in the UK.
The Restaurant Group – 3,000 jobs
3 June: The owner of dining chains such as Wagamama and Frankie & Benny’s has closed most branches of Chiquito and all 11 of its Food & Fuel pubs, with another 120 restaurants to close permanently. Total job losses could reach 3,000.
EasyJet – 4,500 jobs
28 May: The airline has announced plans to cut 4,500 employees, or 30% of its workforce, as it prepared for lower demand.
McLaren – 1,200 jobs
26 May: McLaren Group, the Formula One team owner and maker of supercars, cut 1,200 jobs as it scrambled to save cash.
Clarks – 900 jobs
21 May: Clarks plans to cut 900 office jobs worldwide as it grapples with the growth of online shoe shopping as well as the pandemic.
Ovo Energy – 2,600 jobs
19 May: Britain’s second biggest energy supplier announced in May it planned to cut 2,600 jobs and close offices after the lockdown saw more of its customer service move online.
JCB – 900 jobs
15 May: Digger maker JCB said in May up to 950 jobs were at risk after demand for its machines halved due to the coronavirus shutdown.
Tui – 8,000 jobs
13 May: Travel company Tui plans to cut up to 8,000 jobs worldwide in response to the coronavirus chaos engulfing the tourism industry.
Virgin Atlantic – 3,000 jobs
5 May: Richard Branson’s airline is to cut more than 3,000 jobs, more than a third of its workforce, and will shut its operations at Gatwick.
Ryanair – 3,000 jobs
1 May: The Irish airline intends to slash 3,000 roles and reduce staff pay by up to a fifth.
Aer Lingus – 900 jobs
1 May: The Irish flag carrier, part of International Airlines Group (IAG), plans to cut 900 jobs.
Oasis and Warehouse – 1,800 jobs
30 April: The fashion brands were bought out of administration by restructuring firm Hilco in April, with all of their stores permanently closed and the loss of more than 1,800 jobs.
British Airways – 12,000 jobs
28 April: The UK flag carrier plans to make up to 12,000 of its staff redundant, a reduction of one in four jobs at the airline, with cabin crew, pilots and ground staff affected.
Meggitt – 1,800 jobs
23 April: British engineering company Meggitt plans to shed about 1,800 jobs making parts for commercial aviation.
Safran – 400 jobs
23 April: French aircraft seat maker Safran made 400 job cuts at its UK operations, including a plant in Cwmbran.
Cath Kidston – 900 jobs
21 April: More than 900 jobs are to be axed with immediate effect at retro retail label Cath Kidston after the company said it was permanently closing all 60 of its UK stores.
Debenhams – 4,000 jobs
9 April: At least 4,000 jobs will be lost at Debenhams in its head office and closed stores, following its collapse into administration in April, for the second time in a year.
Laura Ashley – 2,700 jobs
17 March: Laura Ashley collapsed into administration with 2,700 job losses and said rescue talks had been thwarted by the pandemic.
Four months into the health emergency, the latest snapshot shows easing lockdown has helped to reboot growth from the steepest drop in business and social activity since records began, powered by the release of pent-up demand for activities put on hold during lockdown.
Gross domestic product (GDP) returned to growth in May as companies began to restart activities paused a month earlier when the coronavirus crisis peaked. However, the expansion in the economy, of 1.8% on the month, was weaker than expected.
Underlining the scale of the challenge to return life as close to normal as possible, the sharpest declines in economic activity came in the food and drink sector over the three months to May, with output plunging by 69% because of the closure of bars and restaurants.
The reopening of non-essential shops in June helped drive up retail sales by 13.9% in June compared with the month earlier – helping total sales to snap back closer to pre-pandemic levels.
However, the rise was driven by pent-up demand for purchases put on hold during lockdown that are now unlikely to be repeated in future. Online shopping, food sales and DIY sales also rose as people continued to stay at home.
Clothing and other non-food sales remained significantly depressed, in a reflection of the pressure facing the high street. Growing numbers of jobs are being cut by major retailers, while hundreds of shops are being closed across the country – including at Boots, John Lewis and Marks & Spencer.
In the past month, the chancellor, Rishi Sunak, launched a £30bn package of tax cuts and spending measures in his summer economic update in an attempt to kickstart growth as lockdown measures are lifted.
Designed to move the country out of the initial crisis phase of Covid-19 and to get people back to work, the plan comes as the Treasury begins to wind down the furlough scheme, starting in August with companies required to pay national insurance and employer pension contributions for furloughed workers.
As many as 9.5m jobs have been furloughed at 1.2m companies, at a cost to the exchequer so far of more than £30bn as the state paid for 80% of the wages of temporarily laid-off staff.
However, business leaders and opposition MPs have warned the removal of support will come despite Britain’s economic recovery not yet having fully taken hold, with the continuing risk to public health from coronavirus weighing down demand for goods and services.
According to the Office for Budget Responsibility, the government’s economics forecaster, at least 10% of furloughed jobs will be made redundant before Christmas. It expected the unemployment rate, currently at 3.9%, to more than double to levels unseen in Britain since the 1980s.
While many people working from home have managed to save money during lockdown, research from the Resolution Foundation thinktank shows that the average household has suffered the biggest hit to its finances since the 1970s.
Davies, the chair of Britain’s biggest lender, said the end of mortgage holidays for homeowners and the removal of the furlough scheme could damage spending in the coming months – weighing on Britain’s economic recovery.
“Although the most recent retail sales figures are encouraging, we could well see the up-stroke of the V flattening out as we proceed,” he said, referring to the shape of an economic recovery when plotted on a chart.
“The cashflow impact of the crisis has in effect been deferred from the second quarter of the year to the third.”
