The outlook for employment has grown even more pessimistic over the last month, with new research now predicting a rise in worklessness of 3.5 million people.
A poll of 2,776 employer financial officers by the Bank of England forecast a rise in the unemployment rate from 3.9% to 11% by the end of the year, meaning that one in ten people could be out of a job.
The results were even more bleak than those found by a survey conducted last month, reflecting employer plans to review their staffing levels when the government partially withdraws the furlough scheme in August.
Cyrille Lenoel, Senior Economist at the National Institute for Economic and Social Research, said: “Labour market data suggest the unemployment rate may have reached 8.5% in May and we forecast it to peak at around 11% in July-September 2020.”
“When and how the furlough scheme will be ended is going to be key to how the labour market adjusts to the post-lockdown economy,” he added.
Employers were also pessimistic about a bounceback in the economy, predicting sales would be 38% lower than forecasts made before the pandemic; while overheads are expected to increase by 7%.