BRITAIN is set for an increase in unemployment even though recruitment will remain strong as the furlough scheme comes to an end, according to research published today.

The Resolution Foundation predicted that the jobs market will have a “bumpy ride” when the government scheme winds up at the end of the month.

The think tank hailed the programme as an “overwhelming success” that has protected over 11 million jobs since March 2020, while an expected Covid-driven unemployment surge failed to materialise.

But the foundation added that with about 1.7 million workers still on furlough in late July and the rate at which people are coming off it stalling, the labour market remains at “far from full health.”

Its report shows that if furlough rates continue to fall at the same pace as they did between April and June, when the economy was reopening, about 900,000 employees would still be on the scheme when it closes.

Many of them will return to their previous jobs, but the think tank warned that firms are unlikely to have the capacity to take back all previously furloughed staff immediately .

Unemployment could increase by about 150,000 in the autumn, the report predicted.

Hannah Slaughter of the foundation pointed out that there is “huge uncertainty” about what will happen to the jobs market when the scheme ends in less than four weeks’ time.

GMB general secretary Gary Smith said: “The Covid crisis has laid bare the terrible inequalities in the UK economy after a decade of cuts.

“A furlough cliff edge will make a bad situation worse, increasing pay inequality and unemployment and making a farce of the government’s ‘levelling-up’ agenda.

“It will suffocate any economic recovery before it even gets going. Getting the UK back on its feet is a process, not an event.”