The U.K. should not be ending the Job Retention Scheme right now, but since the government continues to go down this route despite clear evidence that the pandemic is not under control we need to start looking at significant increases in Universal Credit generosity.

Combining risk of no deal Brexit with measures to restrict the spread of the new Coronavirus will likely mean business investment channel remains impaired, households have strong precautionary saving incentive, and many sectors will be stuck operating well below capacity. Ungood.

Mitigation measures need to put in place *now* so that households and firms can plan effectively for the challenging times to come. Failure to do this will simply drive further precautionary behaviour and increase the economic impact. We must learn from our mistakes.

As a reminder, 3.5 million workers were still fully furloughed under JRS as at July 31 with a further million partially furloughed. Idea that the market is going to be able to facilitate the reallocation of that scale of the workforce during a pandemic just seems absurd.

Planning here needs to account for that fact that the rise in unemployment over the past few months (likely to accelerate in Sept) already means reintroducing JRS by itself will be somewhat less effective as a mitigation measure next time around. Need new ideas.

Also need to note that increased stringency of restrictions to prevent spread of the virus will likely cause further significant setbacks to parts of the economy that had begun to reopen (restaurants/pubs/airlines/bricks and mortar retail etc) from an already weakened position.

So even workers who have returned in those sectors are likely to experience significant disruption with (currently) no fallback to maintain those job matches. Reminder: These jobs may traditionally be high turnover but these are not normal times for the labour market

The Chancellor has raised the idea of sector-specific measures and potentially some money towards retraining etc. These are useful, but likely insufficient. The planning (and much of commentary) to date seems to have been focused on post-pandemic policy, which is a category error

For those interested, here’s a short back-of-an-envelope exercise comparing JRS versus UC generosity https://twitter.com/tomashirstecon/status/1255101464839696384?s=20