UK Covid recovery at risk as furlough scheme phased out

Covid recovery

Britain’s economic recovery from Covid-19 is coming under pressure amid worker shortages and lengthier pandemic restrictions, as the Delta variant of coronavirus drives up infection rates.

As the government begins to wind down the furlough scheme on Thursday – despite delaying its roadmap out of lockdown by four weeks until 19 July – the ONS monthly snapshot of economic developments suggests the pace of recovery has plateaued.

Figures from the Office for National Statistics show debit and credit card transactions fell by 5% over the week to 17 June, while retail footfall declined for the third week in a row at the tail end of a springtime boom after Covid-19 restrictions were relaxed.

Business leaders are sounding the alarm over a renewed threat to jobs and growth as the Delta variant of coronavirus has driven up infection rates and forced a delay in the final lifting of lockdown restrictions, which ministers had originally pencilled for 21 June.

Meanwhile, firms are coming under mounting pressure from chronic staff shortages and rising supply-chain prices, threatening a burst of inflation pushing up the cost of living in Britain.

Employment remains below pre-pandemic levels, but employers’ groups warn cuts to the furlough scheme from the start of July will endanger jobs and put Britain’s economic recovery at risk.

Frances O’Grady, the general secretary of the TUC, said: “Ministers must not pull the plug on our recovery by cutting off support too soon.

“We need a cast-iron commitment from the chancellor that he will extend furlough for as long as is needed, rather than ending it abruptly in three months’ time. Working families need this certainty now – not a rollercoaster approach to protecting livelihoods.”