Everyone has been impacted by coronavirus in one way or another, but we may not understand the full extent of the economical and sociological damage for some time. The adverse effects of COVID-19 have been plain to see since lockdown officially started in the UK in March, and it came as no surprise to read that we officially entered into a recession following a shrink in the economy of 20.4% in the second quarter of this year.
Are things getting better?
The Office for National Statistics (ONS) said the economy bounced back in June as government restrictions on movement started to ease. On a month-on-month basis, the economy grew by 8.7% in June, after growth of 1.8% in May. Despite this, however, GDP in June was still more than a sixth lower than in February.
Some of the biggest changes in the UK have been those relating to employment. While some businesses were able to successfully adapt to working from home, others were less fortunate and suffered devastating losses. More than 220,000 lost their jobs between April and June, with the oldest and youngest being the worst affected. The figures do not include the millions of people who are furloughed, those on zero-hours contracts but not getting shifts, or people on temporary unpaid leave from a job, as they still count as employed.
The real problem here is being drastically masked by the Job Retention Scheme and a largely furloughed workforce. As on 16 August, more than 9.6million jobs have been furloughed and the employers are beginning to bear the cost of this. Up until the start of August, 80% of all wages and employer’s contributions were covered by the Job Retention Scheme, but this is changing. August saw the removal of funding for employer’s NI and pension contributions, and October and September will see the gross wages claimable value decrease from 80% to 70% and 60% respectively.
The government has not yet commented on what will happen when the scheme comes to an end on 31 October, but some thought must be going into further help for businesses that are still unable to operate. Without further support, it is assumed that many of the currently furloughed workforce will be made redundant from November.