How a new and improved furlough scheme could help the UK tackle recession and economic uncertainty

The UK economy is on the brink of a recession while also experiencing weeks of financial volatility following the launch of the government’s unfunded growth plan last month.

The government’s strategy aims to boost growth over the medium to long term, but households and businesses are already suffering from soaring bills and an uncertain economic outlook.

And then, once the UK manages to tame skyrocketing inflation and severe supply chain disruptions, industry will need to raise production and services to meet growing demand. But a shortage of qualified workers – that is, a loss of staff during the economic downturn – could prevent industry from being able to do this. As such, businesses need a strategy to help them to reduce costs while times are bad, but they also need to be able to quickly ramp up their operations again once the economy recovers.

A targeted furlough scheme could mitigate these recessionary effects right now and help companies prepare for a future recovery in demand. With the right design, such a scheme could cost as much as 60% less than the £70 billion furlough scheme deployed during the COVID-19 pandemic.