Bank of England warns UK unemployment will hit 2.5m after Covid-19 slump – as it happened

Rolling coverage of the latest economic and financial news, as BoE warns one million jobs will be lost by ChristmasLatest: Bank says unemployment to double, to 2.5m One million people expected to lose their job this yearIntroduction: Bank sees ‘material rise’ in joblessnessDownturn less severe than feared…but recovery expected to take longerBank: We’re looking at negative interest rates 3.01pm BST Time for a recap.The Bank of England has warned that UK unemployment will spike at 2.5m by the end of the year, as firms cut jobs due to the shock of Covid-19. In its latest forecasts, the Bank predicts the jobless rate will almost double to 7.5%, and only fall slowly in 2021.Employment appears to have fallen since the Covid-19 outbreak, although this has been very significantly mitigated by the extensive take-up of support from temporary government schemes.Surveys indicate that many workers have already returned to work from furlough, but considerable uncertainty remains about the prospects for employment after those support schemes unwind. Related: Bank of England says economic shock of Covid-19 less severe than expected In reality, the type of the recovery the Bank of England seems to predict is a “square root one” rather than a V-shaped one. Irrespective of the alphabetical or mathematical details of the shape of the recovery, the main point is that this fairly slow recovery is built on on the assumption that the UK policy rate will turn negative to -0.1% and remain negative until the third quarter of 2023!Given the possible distortionary impact of negative interest rates on the economy (negative interest rates will shake the confidence of consumers/depositors in the economy), the main message from the BoE’s report is: “do not go negative!” Related: Another 1.18m Americans file for unemployment as benefits expire Related: Glencore shares slide as it scraps £2bn dividend and posts first-half loss 2.39pm BST The drop in US initial jobless claims seems to have reassured traders in New York.The tech-heavy Nasdaq index ticked higher at the start of trading, up 5 points to a new record high of 11,003.This is messed up:1.2 million new jobless claims is 500,000 higher than the worst week of Great Recession31 million are on unemployment. Benefits have been cut, so they can’t afford rent and groceriesTemporary layoffs are becoming permanentAnd yet the stock market goes up Continue reading…
Via: Bank of England warns UK unemployment will hit 2.5m after Covid-19 slump – as it happened