‘Very tough’ conditions: UK factories plan layoffs as virus bites

Nearly half of the UK’s factories intend to shed staff in the next six months, a survey shows.

Jaguar Land Rover factory UK
Manufacturing representative body Make UK says demand for goods is unlikely to recover for some time, forcing many factories to cut jobs [File: Phil Noble/Reuters]

British factories are increasingly planning to lay off workers, a warning sign for the economy as it tries to recover from the coronavirus pandemic, an industry survey showed on Friday.

Some 46 percent of manufacturers expect to make redundancies over the next six months, up sharply from 25 percent in May, according to sectoral group Make UK which is calling on the government take more measures immediately to support jobs.

“Conditions are still very tough for many companies with disruption likely to continue for some time,” said Stephen Phipson, chief executive of Make UK.

“This has led some to reluctantly conclude that with demand unlikely to return for some time, if at all, they are moving to the painful choice of redundancy.”

The survey showed only a slight improvement in gauges of revenue and new orders.

Make UK said finance minister Rishi Sunak – who has already announced about 133 billion pounds ($166bn) worth of emergency measures, mostly to protect jobs – should consider cutting taxes for manufacturers, a priority for 61 percent of the companies surveyed.

Sunak is due to announce an update to his plans for steering the economy through the coronavirus crisis on July 8.

The number of people on British employers’ payrolls fell by more than 600,000 in April and May, while vacancies fell by the most since the UK’s Office for National Statistics began measuring them in 2001, down 342,000 to 476,000, data released last month showed.

The jobless rate held at 3.9 percent over the three months to April.

The Bank of England said in June the UK’s economy looked on course to have shrunk by approximately 20 percent in the first six months of 2020.

A separate survey of consumers published on Friday showed a small improvement in morale late last month, even though their confidence in the economy remained badly shaken.

The GfK Consumer Confidence Index rose to -27 from a reading of -30 published in mid-June, its highest level since lockdowns began, and helped by an improvement in the survey’s gauge of personal finances.

The Make UK survey of 274 manufacturers was conducted from June 22 to June 29. GfK surveyed 2,000 consumers for the European Commission from June 18 to June 26.

Prime Minister Boris Johnson set out plans on Tuesday to try to spur the UK’s economy, promising to fast-track 5 billion British pounds ($6.15bn) of infrastructure investment and to “build, build, build” out of the coronavirus crisis.

In a speech, Johnson set out a vision where the government could cut through red tape to speed up construction and infrastructure projects and kick-start the economy to “level up” wealth and opportunity in the UK.

Source: Reuters