EITHER:

During the current pandemic, examine the policy options which, aside from the furlough scheme, could help the UK economy avoid recession.

You can focus on:

Explain Macroeconomic policy

Measures to avoid recession.

Reading list:

Anderton, A. 2015.Economics 6^th ed. Harlow: Pearson

Karl E. Case, Ray C Far, Sharon M Oster, 2009.Principle of Economics. Upper saddle River, NJ: Prentice Hall

OR:

Using your knowledge of economics (and your research about the impact of the current pandemic), examine the factors that are influencing rates of unemployment in the UK.

You can focus on:

Explain unemployment

Measures to avoid high unemployment rates.

Reading list:

Anderton,A. 2008.Economics 5^th ed. Harlow: Pearson

Karl E. Case, Ray C Far, Sharon M Oster, 2009.Principle of Economics. Upper saddle River, NJ: Prentice Hall

Extract

Nearly a quarter of British employees furloughed in last fortnight

A record level of employment in the UK was hit by the coronavirus crisis, with 23% of the workforce being furloughed. Photograph: Will Oliver/EPA

Nearly a quarter of employees in Britain have been furloughed in the past fortnight as evidence mounts of the damage caused by theCovid-19pandemic to the economy.

With the government weighing up how and when to start lifting restrictions imposed at the end of March, figures released by HMRC showed that companies have flocked to take advantage of the job subsidy scheme since it was launched on 20 April.

HMRC said a total of 6.3m jobs had been temporarily laid off by 800,000 companies, with claims amounting to 8bn by 3 May.

Official figuresshow the UK had a record employment level of 76.4% before the crisis, with more than 33 million people in the labour force. The number of employees was 27.9 million, of whom 23% have now been furloughed.

Fears that the decision to quarantine large chunks of the economy would result in the unemployment rate surging from 4% - close to its lowest levels since the mid-70s - to well over 10% have prompted the chancellor, Rishi Sunak, to announce the coronavirus job retention scheme (CJRS) within a few days of the lockdown commencing.

Under the plan, workers who are furloughed have 80% of their wages paid by the government up to a ceiling of 2,500 per month. At present, wage subsidies are to remain in place until the end of June, although there is already pressure from employers for the scheme to be extended.

The Office for Budget Responsibility, the independent body that has the task of forecasting the economy for the government, said last week it expected the cost to the exchequer to be39bnbetween March and June. That does not include the cost of a separate scheme covering many of the five million self-employed workers which was announced later.

However, the chancellor, Rishi Sunak, told ITV News on Monday that the scheme would have to be wound down at some point because of its steep cost.

Pledging that there would be no "cliff edge" termination of the scheme, he said: "I am working as we speak to figure out the most effective way to wind down the scheme and ease people back into work in a measured way.

"But as some scenarios have suggested we are potentially spending as much on the furlough scheme as we do on the NHS for example. Now clearly that is not a sustainable situation."

The high level of demand from employers to take advantage of the scheme suggests the government has so far succeeded in limiting the rise in unemployment.

Last week an official survey showed two-thirds of UK firms had asked for public money to pay staff they have temporarily laid off. An employers' organisation, the British Chambers of Commerce, said its surveys showedmore than 70% of private firmsplanned to furlough workers.

The figures came as pensions minister, Thrse Coffey, said the government received 1.8mclaims for welfare payments between 16 March and the end of April via universal credit. It is paid to people in work as well as those who have lost their jobs.

Larry Elliot, May 2020, Nearly a quarter of British employees furloughed in last fortnight, [Online] Available at https://www.theguardian.com/business/2020/may/04/over-a-fifth-of-british-employees-furloughed-in-last-fortnight, [Accessed 22 May 2020]

Learning outcomes assessed:

a)Demonstrate understanding of the key concepts, theories and models in either Micro-economic or Macro-economic

c)Display understanding of key economic objectives of government policy, and the way in which economic policy outcomesimpact Economies

d)Apply understanding of key principles and concepts to current issues in the UK economy and/or Economies internationally

g)Analyse and synthesise key concepts to demonstrate effective academic writing skills.

h)Develop independent research skills and autonomy in assessment preparation.