Macroeconomics: UK economy, IB Economics

First with the 'news'? 

A marginal fall in umemployment over the 3 months to March, to 4.8% but what is going to happen when furloughing, or the Job Retention Scheme ends?

And job vacancies on the rise too...

This BBC article raises a number of concerns about the furlough scheme and its extension until March - critics are sceptical about whether it genuinely well save jobs. 

Here we go again, another lockdown. another round of furloughing with the initial data suggesting that the number of furlough is going to double in the next month. And then where? The dole queue? Or more furloughing?

We are living through an almost unprecedented set of circumstances.

Today's Guardian editorial argues that the end of the furlough scheme is dreadfully timed with the country seemingly on the verge of a second lockdown. 

It argues that the Job Support Scheme is going to prove as good at protecting jobs, or supporting the most vulnerable, and the stimulus effects of the package are likely to be lower, at a time when it seems that ever more stimulus is needed.

This BBC clip looks at the effectiveness of the original furlough scheme - noting the final bill of £50bn, the fact that up to 9m people have received money via the job retention scheme.

It will be interesting to see how Furlough Mark 2 is going to differ from the original scheme.

An overview of the furlough scheme looking at its effects: the workers covered by it, the decline in working hours, the costs and, now, the impact on unemployment. 

It's a fascinating read about a policy that no-one suspected would have to exist a year ago...

Another call for greater employment protection for the months ahead, with Carsten Jung of the Institute for Public Policy Research suggesting that it's merely a sticking plaster until things get worse - most probably in the New Year, and that it will, undoubtedly, be altered at that point.  

I'm sure that he has a point but policymaking is more nuanced that  and I'm not convinced that planning for a worse-case scenario is necessarily the way forward - or good economics.

The latest iteration of the furlough scheme looks to reduce the amount employers pay, increase the amount the government pays and provide increased support to workers. In theory, it should be encouraging.

In practice, I worry about what it says about the immediate prospects for the economy.

The Head of the British Chamber of Commerce has written to the Prime Minister asking for more support for businesses in the wake of the new coronavirus rules. 

It seems that we are potentially on the cusp of another period of lockdown, and businesses feel that they are going to bear the brunt. And if they do, then redundancies will follow.

Here come the job losses - the Guardian says that despite some summer spending - the winter is going to bring a round of redundancies, as the economy struggles to recover from the coronavirus. 

To the tune of London Bridge:

Furlough scheme is winding down,

Winding down, winding down

Furlough scheme is winding down,

Un-employment

At least that's what the hospitality sector is predicting - with potentially hundreds of thousands of jobs at risk.

And here's a look at what the Chancellor, my former pupil - if only briefly - might propose.

Whither the furlough scheme? Or is it wither?

Furloughing is being wound down, but is it on the point of being replaced by German-style targeted wage subsidies?

The Guardian argues that the U-turn over the furlough scheme has failed to save a number of jobs that otherwise would have been protected, noting the record rise in redundancies in the last quarter.

That said, it seems that it's quite a tough case to argue - only 33,000 people were removed from company payrolls last month - although the Bank of England do expect unemployment to reach nearly 8% next year. 

The Chancellor may feel that you're damned if you do, and if you don't, with the announcement that the furlough scheme is being extended to the end of March garnering criticism rather than praise.

It seems that the main issue is the fact that some of those who've already been made unemployed might still have jobs, according to critics. However, I suspect that this is rather overplaying the effect of the scheme. 

With the new lockdown, the government has reintroduced the furlough scheme and with it produced more support for the self-employed too. 

The end of the furlough scheme has prompted the revival of thinking about how a Universal Basic Income might have provided more support for the most vulnerable in comparison with the existing Job Retention Scheme. 

Crikey! Just days before the furlough scheme ends, the latest ONS data suggests that 2m people are still on it. 

Their pay is going to take a hit in November, and some of their jobs are also going to go.

The furlough scheme comes in for a hammering in this Larry Elliott article that decries it as simply temporary - arguing that it's neither targeted nor timely, and highlighting that fact that nearly 1 million workers in manufacturing, professional services and construction are still on the scheme despite the end of socially distancing in these sectors. 

So, how is all this going to pan out? Your guess is as good as mine.

The only lacuna in the Chancellor's fresh round of job protection seems to be for the self-employed - with the Labour Party attacking him for failing to provide them with ample protection under the new iteration of the furlough scheme.

It seems as though the former Governor of the Bank of England, Mervyn King, is a big fam of the furlough scheme, arguing that it might need to be in place for the whole of 2021 too. 

It's a remarkable statement from a man who led the Bank of England during a period of austerity, and hints at the nature of some of the problems that are perhaps still to come, reflecting a new reality in policymaking.

Bad news for the local economy, with the news that although other car firms have started to recover and employment levels are nearly back to normal, that's not the case at Jaguar Land Rover.

This article looks at why that might be, not least a significant downturn in production, although the firm is considering whether or not it is going to keep workers on, in the hope of getting some £20m from the job retention bonus. 

However, the longer term prospects for the company don't look great. 

More on the state of the UK labour market. Watch this space...

The end of the Job Retentions Scheme is nigh, but this Newsnight clip looks at possible successor schemes, with reference to the German scheme of wage subsidies as well as other schemes to support employment in the UK.

I suspect that there's sense in what's being proposed regarding the Autumn Budget, but I wonder if the Chancellor realises that the Treasury statement currently applies to every single government department, almost as much as a result of incompetence as the coronavirus outbreak.

However, detailed tax and spending plans have been put on hold, although wait for the Chancellor's speech to the House today. It's likely to set out the successor to the Job Retention Scheme, another large tranche of government spending that's going to significantly increase borrowing.