Europe is facing a deeper recession in 2020 than previously thought, while the UK economy could shrink by 10% this year.
The shape of the UK recovery is turning out to be anything but a "V," forcing more than half of the manufacturers in the country to reduce their respective labor forces in the back half of the year, according to Make UK's latest Manufacturing Monitor survey.
The second round of job layoffs could be much deadlier for the economy than the first. Why is that? Well, it's being called a "jobs bloodbath" by Make UK, because high-value skill jobs are the next to be axed.
The survey, which covered 170 companies between 7 and 14 July, shows 53% of manufacturers across the automotive and aerospace sectors are expecting layoffs of highly skilled workers by the end of the year. Make UK said these high-value sectors have long supply chains that employ tens of thousands of people directly and indirectly. If these jobs are lost due to an extended downturn, it would be disastrous for the economy and suggest a recovery could take years.
Take, for example, Airbus. The European planemaker, with production sites in the UK, said in late June it would cut 15,000 workers across its entire global workforce and doesn't expect a recovery in air travel until 2023.
Make UK's warning about high-value job loss comes as the UK economy is expected to shrink by nearly 10% this year, making it one of the worst-hit economies on the continent.
The road to recovery is far from a smooth sail, as what it's routinely pitched by government officials and central bankers.
"At present, the prospect of a V shaped recovery for Industry seems remote." said Stephen Phipson, CEO of Make UK.
With no "V" shaped recovery expected, the government might have to support additional rounds of its furlough scheme that pays wages of more than 9 million people. The program is expected to be round down in August and halted in late October.