UK unemployment rises as Covid continues to take toll

The impact of the COvid-19 coronavirus saw UK unemployment grew in the three months to end-September, according to data from the Office for National Statistics (ONS), rising to 4.8 per cent as a further 314,000 redundancies were recorded.

A rise in the unemployment rate has been caused by the ongoing impact of coronavirus, the ONS said.

The latest data represents the period when the first furlough scheme was coming to an end and prior to the government’s latest extension.

The ONS said redundancy levels overall “have reached a record high in most recent periods”.

Source: Office for National Statistics (ONS)

The UK is currently in the midst of its second national lockdown as it tries to deal with the growing number of Covid-19 cases.

Coming into the lockdown companies made more workers redundant in anticipation of the government’s furlough scheme ending on at the end of October, as it was originally intended.

But last week chancellor of the exchequer Rishi Sunak announced an extension to the furlough scheme until the end of March 2021.

In this round of furlough scheme, the chancellor said the UK government would cover 80 per cent of wages with employers only liable for National Insurance and pension contributions.

Jon Hudson, manager of Premier UK Growth fund, said: “Unfortunately the extension of the furlough scheme didn’t come soon enough for some workers but it should help stem the rise in unemployment over the winter.

“Combined with yesterday’s positive vaccine news, there is now a good chance the UK’s unemployment rate will end up lower than the Bank of England’s peak forecast of 7.7 per cent next year.”

Laith Khalaf, financial analyst at AJ Bell, said: “The darkest hour is just before dawn, and with a potential coronavirus vaccine now on the table, there is light on the horizon for the labour market.

“The vaccine breakthrough will give businesses greater confidence that an end to the pandemic is in sight and will encourage them to retain staff for a bit longer. For now though, the statistics are pretty grim, and are likely to get worse before the cavalry arrives.”

Khalaf added: “A week ago the Bank of England predicted that unemployment will peak at 7.75 per cent in the second quarter of next year.

“No doubt economists at the central bank will already be revising that figure in light of the news of a potential vaccine, but with another national lockdown now in force in England, the economic dials will still point downwards in the coming months.”

He finished: “If the vaccine can put life back on a more normal footing next year, the question will be just how big a scar the pandemic has left on the UK economy.”