Unemployment up to 4.1%

New ONS data has confirmed that redundancies in the three months to 31 July were the highest since 2009. This data would have been a lot worse but for the Government's job retention scheme and loan schemes; schemes that gave firms hope that they might be able to bounce back on the lifting of the lockdown. 

The ONS data is already six weeks out of date and firms have been making decisions based on the uncertainty about how difficult trading will be - redundancies and unemployment are likely to increase for some time yet.

Where firms entered lockdown with significant debt on their books, access to further lending may only be a temporary reprieve.  The debt burden will be too much for many firms to carry unless trade levels pick up quickly. Many firms will have to restructure their debt calling on the Government guarantees in respect of new lending but also on the banks for pre-existing facilities. Loan-losses for the banks can be expected to increase sharply in any scenario - the Bank of England's forecasts had suggested a level of £80billion. 

Although loss levels at this level may not threaten the viability of the banking system they will surely impact the ability of the banks to support a strong recovery.