Unemployment set for big surge

A surge in unemployment is likely, thanks to the coronavirus pandemic, but official statistics lag far behind fast-moving events.

Forecasts vary widely and must depend in part on the success and longevity of the Coronavirus Job Retention Scheme (CJRS).

December-February figures released on 21 April showed an increase of 22,000 unemployed compared with a year earlier, rising to 1.36 million. Short-term unemployment (up to six months) is growing. But as employment also increased (by 352,000) the unemployment rate was unchanged at 4.0%.

The Office for Budget Responsibility thinks there could soon be an extra two million out of work, and there were nearly a million successful applications for Universal Credit in the last two weeks of March.

Independent forecasters have raised their predictions for the fourth quarter unemployment rate (on average) from 4.0% to 6.4% (6.9% among new forecasts, according to Forecasts for the UK Economy by HM Treasury).

While some see the rate dropping back below 4%, the most pessimistic predict over 12%. However, the CJRS furlough scheme (now due to run until the end of June) is clearly making a big difference. Within days of opening for claims, more than 300,000 applications were received, covering 2.2 million employees.

https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879642/Forecomp_April_2020.pdf