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The furlough scheme will end soon. What next?

It's tempting to believe that we should extend the furlough scheme beyond its anticipated end date in October. But that only delays the problem—and creates new issues

By Jonathan Portes  

Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street in central London to deliver the Summer Statement in the House of Commons on 08 July, 2020 in London, England. The Chancellor is due to set out the details of the next stage of government’s plan to secure the economic recovery following the impact of the coronavirus pandemic. (Photo by WIktor Szymanowicz/NurPhoto)

The UK labour market remains in limbo. Today’s figures show that, although the total number of hours people actually spent working is down by almost 20 per cent, unemployment has barely budged—although employment fell, this appears to be more than accounted for by EU citizens returning home.  There are millions of people in jobs, but not doing them.

This, of course, is the entirely intended result of the government’s Job Retention Scheme, better known as the furlough scheme.  But it won’t last. Almost everyone expects a…

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