Budget failures could lead to high unemployment
Chancellor Rishi Sunak’s 2021 Spring Budget could be putting 750,000 viable jobs at risk due to flaws in the scheme to reduce unemployment.
The chancellors’ decision to have no follow-up support when the furlough scheme comes to an end in September could mean that unemployment will rise to 2.7 million (8.5%), according to new IPPR analysis.
Figures from the Office for National Statistics (ONS) show that the current unemployment rate in the UK stands at 1.2%, with 1.72 million people out of work.
The think tank said Sunak’s budget did not provide a strong enough stimulus package to properly aid economic recovery after the COVID-19 pandemic.
What HR needs to know about the 2021 Spring Budget:
George Dibb, head of the IPPR Centre for Economic Justice, said that while the chancellor had an opportunity to deliver an extensive stimulus like US president Joe Biden, Sunak only provided half of what is needed to drive a bounce-back from the COVID-19 crisis.
IPPR estimated that a stimulus of £190 billion (8.6%) was needed for a full economic recovery which would secure jobs and public services.
By the think tank's calculation the chancellor’s total planned stimulus after the budget is only half of that at £97 billion.
Dibb said: “What Sunak set out is not enough to restore the UK economy to pre-pandemic levels and puts 750,000 jobs unnecessarily at risk.
“We welcome the chancellor’s announcements of extensions to business support, but we don’t just want businesses to survive, we want them to thrive if we are to grow our way out of this crisis.”
Carsten Jung, IPPR senior economist, said that the budget’s lack of investment in future growth and job creation also poses a serious risk to businesses.
He said: “The Treasury contends there will be significant long-term damage to the economy, but the Budget does not address this.
“Higher public investment could have driven a clean recovery and boosted the care economy, creating future-proof jobs. Sunak needs to step up and act bigger and bolder to achieve both a strong recovery and sound public finances.”