Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

TODAY marks the end of two government initiatives designed to support the UK economy through the pandemic: the furlough scheme, and the temporary cut to stamp duty.

Each fulfilled its brief - unemployment has remained low and the housing market is buoyant. The worry now is whether their success conceals deeper instabilities set further down the line.

With one million people still on furlough, concerns abound over their future. It’s safe to assume that many will not return to work now their employers are expected to cover the full wage bill.

It’s tempting to see a happy solution here. Unemployment is expected to rise modestly off the ending of furlough, while UK job listings are now at their highest on record - can the newly unemployed fill these excess vacancies?

Probably not. Vacancies have been high for a while, as have the numbers of people available for work. There’s little reason to believe the end of furlough will provide an immediate fix.

More tellingly, most furloughed workers are employed in industries still affected by the pandemic. More than half of employees working in air transport were furloughed at the end of July, way above the 5% average for all sectors.

Vacancies, meanwhile, skew towards other industries, meaning those left out of work will likely have to retrain or relocate in order to plug the gaps. A ‘jobseeker’s paradise’, this ain’t.

Add it all together and we could be facing the unsavoury combination of rising unemployment and continuing labour shortages. Where you would normally expect the jobs market to reorganise itself efficiently, the furlough scheme kept it locked in a temporary stasis that allowed mismatches to become embedded.

If there’s an artificial feel to the jobs market, things look even stranger when it comes to housing.

The stamp duty holiday, which, at its peak, allowed people to save on stamp duty for properties worth up to £500,000, has helped fuel a housing market gone mad. Figures released today by Nationwide showed that house prices rose 10% annually in September. Average house prices have risen nearly £20,000 since the holiday was introduced in July, far surpassing the maximum £15,000 saving it afforded.

The worry is that the stamp duty holiday has fostered a buoyant market environment that’s built on flimsy foundations. It’s certainly made things look even bleaker for first-time buyers - Nationwide explains that “a 20% deposit on a typical first-time buyer home is now around 113% of gross income – a record high.” With unemployment set to rise and without the incentive of the stamp duty holiday, it’s unclear how much further the market has to run.

The passage from September to October marks a crossroads in the UK’s battle to keep the economy healthy against the virus. The stamp duty holiday and furlough scheme offered short-term remedies - a permanent vaccine may be some way away.

Important information: The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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