Fears that the North East could see a spike in unemployment as furlough scheme ends

Credit: PA

There are fears the North East could see a spike in unemployment as the furlough scheme comes to an end from today.

The North East Chamber of Commerce says this could be tough for businesses.

  •  Rachel Anderson, North East Chamber of Commerce.

The £70 billion furlough programme has supported millions of UK workers over the past 18 months.

Chancellor Rishi Sunak. Credit: PA

Chief Secretary to the Treasury, and Middlesbrough South and East Cleveland MP Simon Clarke has said the current employment situation in the UK is "really strong".

He said: "It's been a huge success in meaning this awful situation hasn't cost millions of jobs which would have been the central estimate when this all began.

However, uncertainty remains for the future of almost one million workers who were expected to be still receiving support through the financial scheme at the end of September, according to the latest Office for National Statistics (ONS) estimates.

Rishi Sunak has now announced the new 'Household Support Fund', a £500 million fund to help struggling families deal with rising bills this winter.

Economists have warned that although many may find work in recovering sectors such as hospitality and travel, there is also likely to be a rise in unemployment due to new redundancies.

Alan Custis, head of UK equities at Lazard Asset Management, said the rate of unemployment, which dropped to 4.6% last month, is likely to swing higher again.

Mr Custis added that other countries, such as the US and Australia, saw unemployment spikes when similar financial support for workers came to an end.

The end of the furlough also comes amid record UK vacancy figures, with the latest Office for National Statistics data for August reporting more than one million available jobs for the first time on record.

There have also been significant hiring sprees amid labour shortages for HGV drivers, warehouse staff and food production workers.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said he has "doubts" as to whether broader consumer demand will have jumped enough by October to re-employ all staff who remained on furlough.

Leaders at trade bodies for heavily impacted sectors are now looking beyond the furlough scheme to appeal for policy reform in other areas.

Kate Nicholls, chief executive of UKHospitality, said: "With businesses currently experiencing a record number of vacancies, our hope is that those seeking employment will consider the varied and exciting opportunities a career in hospitality offers.

Tom Ironside, director of business and regulation at British Retail Consortium (BRC), said: "First and foremost is the need for Government to deliver on its manifesto promise to bring down the business rates burden to sustainable levels.

"Additionally, to support the many people coming off furlough, the Government should turn the Apprenticeship Levy into a wider Skills Levy to provide greater scope to retrain existing workers through shorter, high-quality skills courses."

The Government says now that most pandemic related restrictions have ended, it is right to end the scheme - and change focus to creating skills and opportunities.