Jobs crisis could trigger furlough extension, economists warn

Philip Shaw, chief economist at investment bank Investec, said further measures will depend on the path of the virus. He added: “It is very possible that more cash from the exchequer is poured into the new furlough scheme.

“The vaccine roll out is important here but also you have got the possibility of a no-deal Brexit coming through. That is a non-Covid event but one that could disrupt the economy in such a way to persuade the Chancellor to extend.”

The Office for Budget Responsibility watchdog has put the cost of extending the furlough until March at £22bn, on top of the £40.5bn pumped into the scheme until the end of October.

The Treasury stressed that it had extended the scheme “to give businesses the certainty they need to plan over the winter months” but refused to comment on an extension beyond March. 

Businesses are reeling as 10m people are hit by tougher restrictions, with London and parts of the South East placed under Tier 3 rules where pubs and restaurants are forced to shut. 

Paul Dales, chief UK economist at Capital Economics, said: “If the Government is forced to continue the restrictions – whether through tiers or lockdowns – beyond March, I think they are obliged to continue the furlough.

“It seems more likely that fiscal policy would be loosened rather than tightened next year… whether through an extension to the furlough, or more grants to businesses.”

The warnings came as the figures revealed that more than 100,000 people older than 50 joined the ranks of the unemployed during the quarter, with tens of thousands facing early retirement or poverty.

Unemployment has risen to 378,000 for those between the ages of 50 and 64, with a record 99,000 pushed out of work in the last quarter, the ONS said. An extra 7,000 over-65s also lost their jobs. 

The crisis has meant that many over-50s have found themselves out of work during the critical years in the run-up to their retirement.