Winding down furlough will reveal the post-pandemic economy

The furlough scheme begins to wind down today, as employers will now pay 10 per cent of their staff’s salaries, while the government continues to stump up 70 per cent of their wages. Employees won’t notice a change to their income, which will still be 80 per cent of their monthly wage, with a cap of £2,500. The question, however, is to what extent employers feel the financial sting, and whether it leads them to scale back their workforce.

The numbers on furlough have been coming down steadily since economic activity liberalised in April. According to official government estimates, May alone saw one million people come off the scheme, as indoor hospitality and more of the services industries were allowed to reopen. But around 2.5 million people remain furloughed or on flexi-furlough, some of whom will have had the government paying their wages for close to sixteen months.