Comment on today’s HMRC update for the number of jobs furloughed in Northern Ireland as of 31 March 2021.
Northern Ireland’s unemployment rate has been kept artificially low due to the arrival of the Coronavirus Job Retention Scheme (JRS) last year. The latest HMRC figures released this morning revealed that there were 99,400 jobs on furlough on 31st March 2021. That represented the first dip below 100,000 this year and a fall of 9,200 (-8%) relative to the end of February (108,600). Over two-thirds of these jobs were fully furloughed with the remainder partially furloughed. At the start of July 2020 there were a total of 139,100 jobs on furlough. This fell to a post-lockdown low of 65,100 at the end of September. The extension of the JRS and a return to lockdown saw the number of furloughed employments rise to a lower secondary peak of 117,700 in mid-January 2021.
Today sees the release of March data from the Ulster Bank Northern Ireland PMI®. The latest report – produced for Ulster Bank by IHS Markit – pointed to output and new orders nearing stabilisation, while employment increased amid growing confidence for the year-ahead outlook. That said, input costs and output prices surged at record rates, while there were widespread reports of supply delays.
The next step of lockdown easing in England will proceed as planned – non-essential retail, outdoor pubs and restaurants and hairdressers (a massive relief!) will re-open next week. While the data says that household savings pots are ready to lend a big helping hand! And with it the route out of the UK being a G7 economic laggard. As for those of us in Northern Ireland, there is no end of the dodgy haircut, or indicative dates for reopening, in sight.
Today’s Budget was largely as expected. Much of the content had been flagged beforehand, and then there were the big manifesto pledges that were off limits. But that’s not to say it wasn’t a significant Budget, and it may indeed be the last, or penultimate, big spending Budget. Rishi Sunak today announced £37.5billion of spending in the current financial year and the next. Apart from last year’s Budget, it is, by any historical comparisons outside of the pandemic, a huge amount of spending. What’s concerning though is that spending in future years is going to be cut at progressively larger amounts, and next April will therefore herald the start of four consecutive years of public spending cuts. On the tax front, there were further cuts or extensions of existing tax cuts in some areas but also tax rises in others.
This week’s title draws on the most popular words being used to describe 2020 and 2021 according to a recent survey. Well barring the expletives! The fight against the virus has left the world worn out but this has not prevented households and businesses from hoping for a better future, even when new challenges continue to arise. So it’s a hopeful note that we end our year on.
It’s usually the time of year when Christmas cheer spreads far and wide. But we seem to be ending 2020 on a mixed note. Growth continues to falter and signs of deeper damage to the economy are surfacing. All our hopes are pinned on the vaccine and that we swerve a Brexit left hook.
Rishi Sunak hasn’t yet completed a year as Chancellor but he is a crisis veteran. The word ‘emergency’ featured four times in Sunak’s speech in which he outlined the UK’s three emergencies. These are health, economic and fiscal. “Our health emergency is not yet over. And our economic emergency has only just begun”.
Recent developments on the vaccine front have provided a much needed shot in the arm for optimism for 2021. In turn, that has filtered through to the economic forecasts. Nevertheless, there is no economic vaccine for the deepest recession in 300 years, just painkillers.
Last week’s hugely encouraging news on the vaccine, as well as a slowing of new cases in Western Europe, was tempered by mounting growth concerns. Before the sunlit uplands of a vaccine-inspired rebound, a very challenging winter awaits us. In many parts, the coming months will see the recovery go into reverse.
Fears of a ‘cliff edge’ end to the furlough scheme were always overdone. Rishi “whatever it takes” Sunak was always going to do more. Treasury watchers have noted that the Chancellor, who has only been in post for seven months, has a proven track record of letting his actions speak louder than his words. He is an active interventionist Chancellor who has demonstrated an ability to adapt and provide more support as and when required. Another round of support measures / fiscal stimulus was due this autumn. With the pandemic rearing its head again, the associated deterioration in the economic outlook brought measures forward by a number of weeks. Today’s Winter Economy Plan is further evidence of a Chancellor who under-promises and overdelivers. Sunak unveiled a package of measures including a wage support scheme, an extension to the VAT cut for hospitality and tourism, and measures in relation to government loan schemes.