Sunak hails avoiding joblessness spike after furlough end

The end of the furlough scheme is unlikely to trigger a surge in unemployment, according to the Chancellor.

Speaking to a committee of members of the House of Lords, Rishi Sunak said he was “optimistic” the end of the job support scheme would not result in a wave of job losses.

There were concerns the sudden end of furlough measures at the end of September could push up the unemployment rate.

However, Sunak said there had been a “pretty positive outcome”, with the worst impact seemingly avoided.

“We haven’t seen a tick up significantly in redundancy notices which is another thing we have been tracking,” Sunak added.

The better than expected outcome will strengthen bets the Bank of England will hike interest rates for the first time in three years when its rate setting committee announces the outcome of this week’s meetings tomorrow.

The Old Lady has previously stressed the importance of waiting to see if joblessness spikes after the furlough scheme ended before tightening monetary policy.

The Office for National Statistics has yet to publish updated official figures which will take into account the ending of the furlough scheme. The Bank will be given advanced sight of the data.

Financial markets are fully priced in for officials on Threadneedle Street to ramp up borrowing costs by 15 basis points tomorrow.

Governor Andrew Bailey has stressed the Bank will “have to act” if medium term inflation expectations spiral.

Sunak also ruled out changing the way banks are compensated on reserves held at the central bank. Paying interest on part of banks’ reserves could offset the damage higher rates could inflict on the public finances.