Almost one in ten Londoners could be unemployed by the end of the year, say economists.
According to new research commissioned by London Councils, the body representing all 32 boroughs, unemployment is expected to peak at 9.4 per cent in December 2021; equivalent to 464,000 out of work across the city.
Shockingly, this is not even a worse-case forecast, with the potential for over half a million (580,000) to become unemployed by February 2022 if the post-COVID recovery is slower than anticipated.
Its authors, economists from Volterra Partners, found that the pandemic has once more widened the unemployment gap between London and the rest of the UK, which had narrowed over the last five years.
Groups expected to be particularly hard-hit include ethnic minorities who are already twice as likely to be out of work, and residents with fewer qualifications who dominate industries with high furlough rates including retail and hospitality.
Councillor Clare Coghill, London Councils’ executive member for skills and employment, said: “The economic fallout from COVID-19 threatens a painful legacy of unemployment in the capital.
“This analysis paints a grim picture of worsening job losses. It’s hard to overstate how worried we are by these forecasts.
“Unemployment on this scale will have serious and long-lasting consequences – including widening London’s economic and social inequalities even further.
“The COVID-19 crisis has shown time and again how councils play a vital role in responding to local challenges and co-ordinating services.
“With unemployment set to be one of the key concerns of the coming months and years, we need an urgent reset of the government’s approach to tackling this issue.
“Rather than top-down, centralised structures, the government must empower local authorities to develop local solutions for helping our residents back into work.”
London Councils is calling for local authorities, including Southwark, to be given more powers to help people back into work, including through the jobcentre network, currently overseen by the Department for Work and Pensions.
Its members are also pushing for Restart, the government’s flagship support programme for the unemployed to be decentralised.
Ellie Evans, senior partner at Volterra Partners, said:“This work has highlighted the scale of the unemployment challenge we are likely to face here in London.
“The capital has persistently had more of its workers supported by furlough throughout the pandemic.
“There are boroughs and industries that are much more sensitive to international travel and tourism which may not recover as quickly as the rest of the economy.
“This underlines the need for bespoke, localised and flexible unemployment interventions aligned with residents’ requirements and businesses’ identified skills gaps.
“We also must not forget the entrenched inequalities facing certain subgroups of the population.
“Targeted support to improve access for these groups, break down barriers and widen opportunities must remain at the forefront of policy making.”