The jobs of hundreds of thousands of people could be at risk if the Government does not extend the furlough scheme, new research suggests.

A new analysis from the think tank New Economics Foundation (NEF) estimates that 660,000 people could be pushed into unemployment unless the Government rolls back the increase in employer contributions and extends the furlough scheme.

NEF argues this is partly because the additional 20% employer contribution towards furlough wages from the start of August will not be cost-effective for around one-third of furloughed jobs (around 250,000).

The think tank recommends the establishment of a permanent replacement scheme which would allow struggling firms to furlough their workers in response to future economic shocks. They argue this would build resilience in the UK economy and bring the UK in line with other European nations.

‘The current end date for the furlough scheme is arbitrary and can cause unnecessary harm to thousands of workers across the UK, by risking unemployment or facing a reduction in pay,’ said Alex Chapman, senior researcher at NEF.

‘Our analysis highlights that demand will remain suppressed because of voluntary measures that the public will take in response to the uncertainty around the delta variant.

‘The furlough scheme has been a necessary lifeline for millions of workers, and we strongly urge the Chancellor to retain it beyond September. Over time, similar to some of our European neighbours, a more permanent furlough scheme should be introduced that can help the British workforce build resiliency against future economic shocks such as climate disruption, trade realignment and other public health emergencies.’