Responding to latest official employment figures, with initial figures suggesting a pick-up in unemployment in May, Tej Parikh, Chief Economist at the Institute of Directors, said:

“The furlough scheme continues to hold off the bulk of job losses, but unemployment is likely to surge in the months ahead.

“Wage support has given firms some much-needed time to regroup. Many have adjusted their business to the new circumstances, launching new products and embracing digital platforms. Despite these efforts, activity will inevitably be below normal for some time as social distancing continues, and employment looks set to take a hefty hit. Salaries and vacancies are also likely to keep falling as businesses aim to keep costs down.

“As many as a quarter of firms have said they will struggle to pay anything toward furloughed workers’ pay come August. More bad news could be just round the corner, as redundancy consultation periods kick in.

“The Government must act now to slash the cost of employment. Increasing the Employment Allowance and reducing National Insurance bills could help firms hold onto their people. While it might make sense to hold off on broader tax cuts, the Treasury should be targeting investment and hiring in the here and now. The Government must also work at pace to revamp training schemes and the skills system as a whole.”

The IoD’s latest Confidence Tracker found that hiring and investment intentions for the year ahead hit a new record low, in data running since July 2016.