Affecting vast areas of the UK economy – from factories to the high street, banking, media and energy – the job losses announced in the past fortnight coincided with another wave of panic selling on stock markets and fears of a further global recession.
Two of the UK’s biggest lenders, Lloyds Banking Group and Barclays, along with Credit Suisse, are laying off workers in the UK. BP and Shell have been prompted to cut jobs because of the collapse in crude prices, which has hit oil companies hard. And the British Gas owner, Centrica, reiterated on Thursday that it is to axe 1,000 jobs in the UK this year, as part of 4,000 job cuts by 2020.
Michael Hewson, chief market analyst at CMC Markets UK, said: “These are all fairly highly paid roles … You’ve got to think that over the next six months you’re going to see some trickle-down effect. A lot of the recovery in the UK has been consumption based, so that ultimately is going to hit consumption rates.”
George Buckley, chief UK economist at Deutsche Bank, said the loss of highly paid City jobs, along with the new stamp duty surcharge on second homes from April, was likely to affect the buy-to-let market and the wider housing market. “We have a list of 10 reasons why we are nervous about London house prices,” he said. “I imagine a lot of people who work in the financial services industry own buy-to-let property. It could have a knock-on effect on the buy-to-let market and the property market as a whole.”
Frances O’Grady, general secretary of the Trades Union Congress, said: “The UK labour market is becoming more polarised by the day. The loss of important middle-income jobs, in industries such as steel, should concern us all.”
Weak wage growth is also a problem. “While employment rates may have recovered, real wages are still way below their pre-recession level,” O’Grady added, calling on the government to commit to an “active industrial strategy”.
David Kern, chief economist at the British Chambers of Commerce, said that bankers stood a better chance of finding new employment compared with people in engineering roles. “The biggest effect will be in areas, particularly manufacturing, where it is very difficult for the people that are affected to redeploy their skills because there aren’t similar recruiters.”
The headline job losses will be spread out over a period of time, so economists are sceptical that they will push up the UK unemployment rate, which is currently 5.1%. Employment has been growing strongly, with more than half a million more people in work in the final quarter of 2015 than a year earlier; the figure has been boosted by migration and by older people remaining in the workforce for longer.
Amazon, for example, is hiring in the UK and the rest of Europe: the online retailer plans to create more than 2,500 permanent jobs across Britain this year. But many high street retailers are struggling, and supermarkets are also cutting back as a fierce price war shows no sign of abating.