UK Employment: the Furlough Scheme by numbers
From yesterday the UK Government is reducing its contribution to 60% with employers chipping in 20%( up from 10%) to give those on Furlough 80% of their salaries. However faced with this additional cost and lower sales, 1 in 5 of companies are planning to make workers redundant so it is going to be a painful transition for the next few months as the Scheme comes to an end fully as at 30-09-21.
11.6 million workers have been supported in the life of the Furlough Scheme with 5.1 million registered at 31-01-21 which had fallen to 1.9 million as at 30-06-21. Markets will be watching how the UK as a stand alone economy deals with back to work with the removal of assists from the UK Government. Right now GBP is enjoying a strong performance versus both USD and EUR at its highest levels since its previous peaks in 2021 in February and May. GBP/USD at 1.3905 over the weekend.
With the Federal Reserve likely to taper its bond purchases, the question is what the effect will be on the buoyant US housing market. Beyond the obvious that with a reduction in bond purchases, interest rates are likely to rise, the question is how much and in what timeframe. That plus the fact that the domestic housing market has enjoyed a good run fuelled by low financing rates together with widespread availability of finance, suggests that at the very least the US housing market will pause. The argument supporting a pause rather than a sharp fall is twofold: firstly in 2013 the Federal Reserve learnt a lot about what happens to the wider markets when they have a so called taper tantrum; secondly the Federal Reserve remains convinced that the US economy has not fully recovered from the effects of the pandemic and that current inflation, even at a higher level than it was expected to be, is not a reliable bellwether for the need for higher rates-yet.
Rivian, a well capitalised EV manufacturer backed by both Amazon and Ford is weighing the decision as to where to build a giant factory, and the choice is between the UK and Continental Europe with rival proposals from Germany and the Netherlands. The investment will be worth GBP 1 billion and is part of a drive by the UK to woo the EV sector with separate initiatives to persuade Korean companies LG and Samsung to build giga factories to turn out batteries. Rivian has one factory at present in the USA in Normal, Illinois which used to belong to Mitsubishi Motors. The UK has identified a suitable site near Bristol and that, plus some juicy government subsidies to sweeten the deal may yet tip the balance in favour of the UK. Amazon has placed an order for 100,000 EV trucks which has placed a degree of urgency for the decision to be made.
This song became Elvis Presley’s 16th to reach Number One this day in 1970. Still timeless after all these years, this song became one of The King’s standard repertoire:
When no-one else can understand me
When everything I do is wrong
You give me hope and consolation
You give me strength to carry on
And you’re always there to lend a hand
In everything I do
That’s the wonder
The wonder of you
And when you smile the world is brighter
You touch my hand and I’m a king
Your kiss to me is worth a fortune
Your love for me is everything
I guess I’ll never know the reason why
You love me as you do
That’s the wonder
The wonder of you
I guess I’ll never know the reason why
You love me as you do
That’s the wonder
The wonder of you
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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