UK economy rebounds in August but job cuts could slow recovery

The data showed companies in both the services and manufacturing sectors cut jobs at a faster pace in August - echoing the almost daily announcements of lay-offs among many of Britain’s biggest companies.

Duncan Brock, Group Director at CIPS, said: "As the UK heads for the deepest recession in living memory, any celebration is premature as firms moved from the protection of furlough schemes to the harsh reality of job shedding with employment levels declining at their fastest since May.

"Reducing headcount was a quick fix for many firms struggling to maintain strong supply chains and their position in the marketplace amidst higher raw material and import costs."

Tim Moore, economics director at IHS Markit, added: "Private sector firms reported another sharp fall in employment numbers as scarring from the pandemic and lingering doubts about the sustainability of recovery resulted in a need to cut overheads.

"The rate of job shedding accelerated since July, with survey respondents frequently noting that redundancy programmes had been running in tandem with efforts to return some staff from furlough."

Economists polled by newswire Reuters showed many think it could take Britain’s economy two years to recover the output lost during the pandemic, with a contraction of almost 10% in store for 2020.