A lost job cuts a household's income, and often more than that

For the person who loses a job and their family, there is the daily worry of not knowing where the next pay packet is coming from. Savings run down; some sell the car or move somewhere cheaper. Even when they find a new job, it may pay less than the old one. For many people a job is part of their self-worth, so being out of work can strain family life and harm mental and physical health.

Households spend less, so firms sell less

Unemployed workers and their families cut back on what they buy, so consumption falls and firms selling to them lose sales. Firms that expect weaker demand hire fewer workers, which can push unemployment higher still. For some firms there is an upside: with more people looking for work, employers find recruits more easily and can hold down pay rises, which keeps their costs lower.