Companies making redundancies in the UK

COVID-19’s impact

Companies across all sectors have been struggling this year as COVID-19 has struck the world’s economy. Businesses everywhere have had it tough but the retail and aviation sectors are the ones being hit the hardest. With social distancing measures and the lockdown limiting the amount of productivity in the workforce, production and service has been difficult to carry out. The huge consequence of all of this for the economy has been a decrease in cash generation, and unfortunately some things are done in response to try and repair the damage.

The main repercussion of the pandemic has resulted in thousands of people in Britain losing their jobs. A large number of companies have announced plans to reduce the size of their workforce. Many firms across the UK have fallen into administration this year, while others are balancing on the fence – many being held up by the government’s job retention scheme.

List of companies cutting workers:

Next

The Next store chain is planning to make redundancies at its head office. The group was forced to close all its stores when lockdown was imposed and lost revenues for the year. The potential amount of money being lost totalled up to around £1 billion.

Airbus

Airbus is to cut 1,700 jobs n the UK as part of global restructure due to reduced production levels. Chief Executive Guillaume Faury warned the company was planning to have a large drop in jetliner output due to the upcoming large cut to the work force.

John Lewis

The retail giant is looking to close more of its stores, make redundancies and remove all of its bonuses. The new chairman reportedly sent a letter to the staff, warning them of potential closures as well as cuts to jobs.

It is said that the letter included implications for some Partners’ jobs which involve companies like Waitrose. It is not known yet how many roles could be affected by recent events.

Bank of England: Coronavirus V-Shaped Recovery Likely

Despite bleak early forecasts, the Bank of England has announced that a V-shaped economic recovery is seeming increasingly likely. Chief economist, at the Bank of England, Andy Haldane has announced that the British economy is recovering faster than expected. However, with warnings of higher inflation and the threat of unemployment, this recovery could be jeopardised. Official figures published earlier this week showed that the British economy shrunk by 2.2% at the beginning of this year. This represents the sharpest economic downturn since the 1970s. According to those figures, the UK economy was set for the deepest recession in history. Further, with the dwindling of economic activity by 20% in April, the first month of full lockdown, a deep slump was expected. However, earlier this week, during a webinar, Haldane noted: “There is a debate about which letter of the alphabet will best describe the path of the economy, with some scepticism about the V-shaped scenario path in the Bank’s May monetary policy report. It is early days, but my reading of the evidence is so far, so V.” As the rest of the world emerges from lockdown, financial markets have witnessed one of the strongest quarters on record.

From April to June, Wall Street has displayed a dramatic turnaround, aided by emergency financial support provided by the federal government. Since the start of April, the S&P 500 index has risen by almost 20%, demonstrating the largest quarterly increase since 1998. During that same period, the FTSE 100 has resurged by almost 10%, surpassing the peak of 2010, when the market was recovering from the 2008 financial crisis. The Bank of England’s chief economist added that the economic recovery is largely down to consumer spending, which returned faster and stronger than forecasts had predicted. However, with unemployment skyrocketing, the fate of the recovery remains uncertain.

Coronavirus and the UK Economy

Economic experts have warned that the global coronavirus pandemic and lockdown measures in place across the world may cause the UK economy to shrink by 35%. The BBC has reported that independent tax and spending watchdog, The Office for Budget Responsibility, has raised the alarm over the potential spill-out from the coronavirus pandemic. While making the stark warning, the independent watchdog added that the 35% reduction projection also included a massive growth of unemployment from 3.9% to 10%. However, despite its findings making for ominous reading, the research was premised on two hitherto unknown constants. Firstly, the model used by The Office for Budget Responsibility was based on a projection of a three-month lockdown. Secondly, the organisation added to its findings that despite the obvious potential for the UK economy to shrink, it expected business to hastily return to normal, in the immediate aftermath of a lockdown.

Broader Impact of Coronavirus on the UK Economy

With a vast proportion of the country’s employees placed on the government’s Coronavirus Job Retention Scheme, many employees have simply been furloughed. However, increasing numbers have fallen foul of the job market, with record numbers of Universal Credit application being submitted. In the last two weeks of March, 500,000 people started the process of claiming Universal Credit. Figures from the first week of April denote a significant drop. Yet, statistics on web searches for terms related to unemployment and unemployment benefits remain high. Jobs website Indeed.co.uk has reported that vacancies for jobs in food preparation, food service, hospitality, tourism and beauty sectors have fallen by as much as 70%. Across all industries, there has been a staff lay-off rate of around 30%.

After a leaked memo hinted at a Cabinet split over the precise date of lifting a lockdown, with some ministers vying for a May 4 reopening and others considering May 25, pressure has increased on the government to formulate a viable timetable towards reopening the country.