LONDON (Reuters) – Britain’s economy has started to recover from its coronavirus lockdown but signals about a rise in unemployment are raising doubts about how much momentum is building behind the rebound.

Bank of England Chief Economist Andy Haldane has described the shape of the economy as “so far, so V”, albeit with big risks ahead.

But many economists say the most recent data represents a release of pent-up demand rather than the beginning of a sustained recovery.

Most economists in a Reuters poll published this week thought the outlook for the British economy had stayed the same or worsened over the past month.

Here are some early indications about Britain’s recovery so far.

Layoffs risk

The jobs market offers the greatest cause for concern.

Searches on Google for the word “redundancy” have jumped, something that turned out to be an accurate predictor of layoffs during the 2008/09 financial crisis, according to Samuel Tombs, an economist at Pantheon Macroeconomics.

The proportion of British manufacturers planning redundancies now exceeds 50%, according to trade body Make UK, double the share of a few months ago.

Britain’s statistics office said last week that the number of employees on company payrolls slumped by 649,000 between March and June, but the pace of decline had slowed in recent weeks.

Consumer demand bounces back

The strongest evidence for a quick rebound comes from consumers. Gauges of confidence and demand – ranging from surveys of households to credit card spending data – suggest a rebound is underway, helped by savings built up during the lockdown when people were unable to eat out or go on holiday.

Still, a return to normal is a way off. Consumer confidence and official retail sales figures on Friday will give a more complete picture of the recovery in household spending.

… But for how long?

One of the key questions about the strength of the recovery is how consumer behaviour will have changed in response to the pandemic.

“I would put weight on the logic that suggests that as a behavioural response to the supply shock, cautious consumers, worried about unemployment and health risks, will hold back the economy,” BoE rate-setter Jonathan Haskel said on Thursday.

He pointed to surveys showing a majority of British people are uncomfortable about eating indoors in restaurants and going to the cinema.

Businesses see a long haul

Many companies fear demand will not recover to normal levels quickly.

Nearly half of large British businesses surveyed by accountants Deloitte said it would take until after the second quarter of next year for demand to return to pre-pandemic levels.

Similarly, a BoE survey of company executives showed businesses still see a 10% hit to sales from the COVID-19 crisis in early 2021 – which will likely take some time to fade.

In May, the BoE published a scenario suggesting the economy would regain its pre-pandemic size by the second half of 2021.

Reporting and photo: Reuters