State of the Economy: Rising Unemployment

Anne Marie Waters

Tuesday August 4th 2020

 

The word that takes centre stage this week is unemployment.  Big names are laying off staff in increasingly worrying numbers, and we are still in the midst of the government’s furlough scheme.  The state footing the staff bill for business will come to an end soon, and then the real unemployment figures will hit.

In the meantime though, Pizza Express has announced it is considering the closure of 67 of its outlets, resulting in the loss of over a thousand jobs.  According to the BBC:

All its UK outlets had been closed since lockdown began on 23 March. They began reopening in July when lockdown rules were eased.

Pizza Express said in Tuesday’s statement that customer demand had been “encouraging” at the restaurants which had reopened and that plans for further re-openings were well underway.

The company said restructuring the business would put it on a stronger financial footing in the new socially distanced environment.

If all 67 outlets are closed, that would mean the loss of 15% of its restaurants, but it said the final outcome was yet to be decided.

There is equally bad news in the electronics retail sector as Dixons Carphone stated it was cutting around 800 jobs.  Chief operating officer Mark Allsop said: “We’ll do everything possible to look after those colleagues we can’t find new roles for, financially and otherwise.”

The company has a staff of 24,000 and has reported that online sales were helping to make up for the two-thirds of sales it lost during the coronavirus lockdown.

At the other end of the scale, big business is similarly suffering.  Oil giant BP has reported a $6.7 billion quarterly loss and reduced its dividends – again as a result of the coronavirus.  The BBC reports:

The dividend news is another blow for pension funds and private investors who have seen a string of firms cut or halt payouts.

The loss was largely due to BP writing down the value of its assets after it cut its oil price forecasts.

BP said the outlook for oil prices and demand was “challenging and uncertain”.

It also warned that the pandemic could weigh on the global economy for a “sustained period”.

In the short-term, BP said it expected demand for oil could be up to nine million barrels per day lower compared to last year.

It has already announced it will cut 10,000 jobs, with as many as 2,000 set to be lost in the UK.

Finally, the tourism industry continues to take its blows.  Hays Travel, which bought Thomas Cook and has a staff of around 4,500, has also announced staffing cuts.  Now the company says it will lose up to 878 jobs.  A statement read “We are devastated that after all of our efforts and the huge investment we’ve made, we now face losing some of our valued employees, through no fault of their own.

Following the decision to ban travel to Spain and the changes in furlough conditions coming at the same time, we have had no choice.”

In July, the UK government imposed a 14 day quarantine for travellers returning from Spain and its islands, having an enormous impact on tourism there.

Overall, the picture is still a bleak one, and getting bleaker. The months ahead will bring more of the same and a coherent government plan for our recovery is desperately needed.

 

Anne Marie Waters 

Leader

For Britain