Unemployment Claims in the UK Soar in First Month of Lockdown

Having previously worked in his family's minicab business, Abdul, aged 40, from Londo
NIKLAS HALLE'N/AFP/Getty Images
Kurt Zindulka

The number of people claiming unemployment benefits in the United Kingdom rose by 856,500 during the first month of the national coronavirus lockdown.

The Office for National Statistics (ONS) said that the number of claims rose by a record 69 per cent in April, reaching 2.1 million in total.

In response to the dire economic numbers, the deputy national statistician for economic statistics at the ONS, Jonathan Athow, said: “While only covering the first weeks of restrictions, our figures show Covid-19 is having a major impact on the labour market.”

“In March employment held up well, as furloughed workers still count as employed, but hours worked fell sharply in late March, especially in sectors such as hospitality and construction,” he added.

“Through April, though, there were signs of falling employment as real-time tax data show the number of employees on companies’ payrolls fell noticeably, and vacancies were sharply down too, with hospitality again falling steepest,” Mr Athow warned.

Over the weekend, the Bank of England’s chief economist, Andy Haldane, said that the UK is facing levels of unemployment not seen since the 1980s.

The number of unemployment claims reveals only a fraction of the scale of the economic crisis, as it does not include those who do not qualify for government assistance or those taking advantage of the government’s employment furlough scheme, probably over seven and a half million people.

“Add all that and you’ve got anywhere between a third and a half of the workforce either unemployed, underemployed or working shorter hours, and at least some of them might have a fearfulness about future incomes and about their jobs,” Mr Haldane said.

The release of the economic figures comes as a study conducted by the CIPD professional body for HR and the recruitment group Adecco found that over one-fifth of all British businesses are planning to lay off workers in the coming months. Many more companies are reporting hiring freezes and pay cuts to deal with the economic collapse.

The Office for Budget Responsibility (OBR) also warned that there is little possibility that the British economy will be able to bounce back this year.

The OBR previously stated that the British economy could see a steep decline, by as much as 35 per cent, before recovering in what it is referred to as a ‘V-Shape’ recovery.

OBR chairman Robert Chote said that it is now likely that the UK will face a permanent “scaring” to the economy and will “certainly” lead to higher levels of debt.

Last week, it was reported that the Treasury Department is projecting under the best case scenario the government will face a £337 billion budget deficit this year, up from the £55 billion that was expected before the crisis.

The government said that the deficit could rise to as much as £516 billion with a five-year budget hit of £1.19 trillion, and is considering massive tax hikes to make up for the shortfall, a move that would break the Conservative Party’s 2019 manifesto, as well as possibly prolonging the recession.

Follow Kurt on Twitter at @KurtZindulka

COMMENTS

Please let us know if you're having issues with commenting.