Two million face unemployment when furlough ends in March, economists warn

Up to two million people who have been furloughed unnecessarily are facing unemployment in March, the Institute for Fiscal Studies has warned.

Paul Johnson, the director of the economic research institute, claimed that millions of Britons "in sectors that have not been particularly affected" by the coronavirus pandemic risk losing their jobs when the scheme comes to an end.

It comes after Rishi Sunak extended the job retention scheme across the UK until the end of March to “give businesses security through the winter".

However, Mr Johnson warned: "I think there's a real concern here that we know that there were probably more than two million still on furlough in October, many of whom in sectors that have not been particularly affected by this crisis, who we might think will continue to on furlough right through until March and then the jobs won't be there at the end."

The Chancellor also announced support for the self-employed on Thursday, with the next income support grant for November to January increasing to 80 per cent of average profits up to £7,500.

Mr Johnson warned that the self-employment scheme was "wasteful on the one hand and badly targeted on the other".

"A large amount of that money is going to self-employed people who have seen little or no reduction in their incomes whilst a million or more have seen big reductions in their incomes and are getting no support at all," he added.

The IFS has estimated that 18 per cent of those for whom self-employment makes up at least half their income were ineligible for the Self Employed Income Support Scheme (SEISS), as well as 38 per cent of those with any self-employment income.

Those who cannot claim include people who did not file a 2018-19 tax return because they had just started working for themselves, company directors, those earning more than £50,000 and people who earned less than half their income from self-employment.

The IFS research found two-thirds of people who had not claimed SEISS had seen a decline in income and about a sixth were not working at all.

Business Minister Nadhim Zahawi  said he would not be "presumptuous" when asked whether the extension of the furlough scheme indicated more lockdowns could be on the way.