Fitch Ratings says job cuts are necessary for the economy to grow
Fitch’s latest job outlook shows the job losses in the sector have forced the company to cut its forecast for the UK economy.
In its latest report on the outlook, Fitch said the sector’s outlook for the next 12 months has been hit by the job cuts in the oil and gas sector.
The firm said in a note to clients the cuts will have a “negative impact” on economic activity.
The job cuts have also caused job losses to be “further exacerbated by a reduction in the number of new hires and retention in the energy sector”, Fitch wrote.
“While these jobs will be lost in the short term, the overall job creation outlook for this sector is likely to be stronger,” the report said.
Fitch said it was not yet clear how many jobs will disappear in the UK, as it is too early to say how much the industry will be affected by the cuts.
It said that while there are now fewer jobs available in the industry than there were in the previous three months, it expects job growth to continue, but only slowly.
A Fitch analyst, John Johnson, said: “The oil and oil and natural gas sector has lost more than 10,000 jobs in the last two years and now faces the prospect of losing more than 20,000 more jobs in a period of 10 months.
There is some good news in the numbers: the energy and gas industry is still adding jobs but the job growth is still very limited.
This means that if we assume the job loss in the renewables sector of 10,500 jobs by 2020, the industry is now likely to add about 3,000 new jobs in 2020.
We have a strong case that the UK could become an energy powerhouse in the future, but the fact that so many of the jobs will not be lost means that it will be a difficult time for the industry.”
Firms that rely on oil and other gas will also face the threat of job losses, with the energy analyst warning of a “severe disruption” in oil and the gas sector’s ability to deliver projects, according to Fitch.
More: Fitch forecasts that the oil-related job losses will lead to a contraction in the services sector, which has been the fastest-growing sector of the UK’s economy in the past two years.
It also expects a “moderate” contraction in manufacturing and construction.
In its latest forecast for UK jobs, Fitches forecast that the industry’s output will fall by 4.5% over the next four years and the UK GDP will shrink by 2.6%.
FITCH also said that “business investment in the economy” will be cut by 3.2% over this period, a significant reduction from the previous forecast of a 1.3% decline.
Last month, the British Chambers of Commerce (BCC) warned that Britain’s unemployment rate could climb above 10% by 2020 as a result of the job and energy sector job cuts.
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