Londoners are looking for jobs outside the capital as the city struggles to generate new work after the coronavirus slump.
Searches for positions in the other parts of the U.K. by London-based users on recruitment site Indeed.com climbed 27% in August from a year earlier. At the same time, the number of jobs being advertised as available in the city remains about half the level seen in February.
Help Not Wanted
The number of London jobs advertised is around half the level seen pre-Covid
Source: Indeed
London’s jobs drought is persisting even as demand is beginning to pick up in other areas of the country. Businesses in the capital have been hit particularly hard by a pandemic that has kept people away from the center, wary of using public transport to venture into offices, restaurants, and shops.
Chancellor Rishi Sunak on Thursday unveiled a new job support plan in an attempt to keep more Britons in work through the winter. That may be too little, too late for many.
People in cleaning work and retail were most likely to be searching for a new job outside London, Indeed found. The most popular areas for their search were the bordering counties of Essex, Kent, and Surrey.
“London’s booming economy has been an engine of job creation and career progression for decades,” said Jack Kennedy, U.K. economist at Indeed. “The pandemic has shifted the dynamic between the capital and the areas in its orbit.”
Despite the shaky picture for jobs, confidence among British households increased in September, a separate GfK report showed.
However, amid growing restrictions to curb fresh coronavirus infections, “only an unbridled optimist will bet on confidence climbing further,” said Joe Staton, client strategy director at GfK.
U.K. Chancellor Rishi Sunak’s latest salvo against the economic chaos of the coronavirus marks a shift in tactics that risks making a painful spike in unemployment inevitable.
Gone is the furlough program that may have saved millions of jobs in the early days of the pandemic yet which proved too expensive to last. In its place is a plan to subsidize wages for the next six months.
The new support is only about a quarter of that available earlier in the year. To get it, employees must work a third of their normal hours, but companies will have to top up their wages -- a bar that will be too high for many that are struggling.
Goldman Sachs Group Inc. forecasts around 1.3 million workers will benefit from the plan after October, while 2.2 million will move from being furloughed into unemployment. That would leave the jobless rate at 9% -- more than double the current level.
Big Jump
U.K. unemployment was already rising during the furlough program
Source: Office for National Statistics
The pulling back of aid suggests Prime Minister Boris Johnson’s government has chosen to stop trying to prevent a surge in joblessness and focus instead on the permanent adjustment of the economy to a weaker growth rate and a higher level of unemployment as the virus drags into 2021.
“It’s helpful, but not that much given the magnitude of the problems,” said Peter Dixon, an economist at Commerzbank AG in London. “It only supports people already working in a job, so a lot of companies probably won’t bring their employees back from furlough. We expect unemployment to climb to about 8%, and it might even go higher.”
Sunak’s latest program marks a shift to a more traditional approach for the Conservative party, with all the risks that entail. Margaret Thatcher’s government in the 1980s radically reshaped the economy by allowing struggling industries to die, at the cost of soaring unemployment that proved controversial for years.
“The chancellor’s initial policy response to the economic impact of COVID was bold and compassionate,” said Helen Barnard, director of the independent Joseph Rowntree Foundation. “The design of this scheme risks undermining its success and leading to more job losses.”
What Bloomberg’s Economists Say...
“We see little reason to change our view that there will be a sharp rise in unemployment in 4Q. Given the likely impact of the latest restrictions on demand and the danger that Sunak’s latest intervention falls flat, the risks to our view are probably tilted to the upside.”
-- Dan Hanson and Jamie Rush. Read their U.K. INSIGHT
Analysts were already warning that the number of Britons losing their employment because of the pandemic could swell beyond the current level of 700,000. The risks have mounted in recent weeks amid new infections and enhanced restrictions, but that didn’t stop Sunak from sticking with his pledge to end the previous furlough policy as planned on Oct. 31.
That measure supported more than 9 million jobs -- but at a cost of 39 billion pounds ($59 billion) so far. Conservative lawmakers have begun fretting over the mounting bill, which pushed national debt over 2 trillion pounds for the first time. Figures Friday showed Britain now has borrowed more since the national lockdown was imposed in March than during the whole year following the 2008-09 financial crisis.
Sunak said it wasn’t “sustainable” to keep up such spending while noting the economic situation would have been worse without it.
Under his previous program, the government paid people who were unable to return to their workplaces because of COVID restrictions as much as 80% of their wages. While Sunak said back in March that he couldn’t protect every job, the size and scale of the initiative was certainly an attempt to preserve as many as possible.
| SUNAK’S ‘WINTER PLAN’ AT-A-GLANCE |
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Thursday’s package was less ambitious, and when pushed on the outlook for unemployment this year, the chancellor highlighted figures from the Bank of England and Office for Budget Responsibility showing a high, single-digit rate. Such outlooks don’t “make for good reading,” he said.
Jobs Hit
U.K. unemployment is predicted to rise sharply this year
Source: Office for National Statistics. Forecasts from Office for Budget Responsibility (July), Bloomberg (September), Bank of England (August)
The replacement policy will pay subsidies to workers who can return to their jobs for at least a third of their normal hours. The employer will pay the hours they work, and the government and employer will each pay a share of wages for the hours they don’t work. Employees will also take a hit as some lost hours won’t be compensated at all.
“The economy is going to change and adapt,” Sunak said Thursday. “I can’t promise everyone can go back to the job they used to have.”