The latest set of economic data released by the National Office for Statistics (ONS) paints a stark picture of the pandemic’s continued impact on the UK economy, with unemployment and redundancies on the rise.
Early indicators for August 2020 suggest that the number of employees on payroll in the UK was down by around 2.4 per cent (or 695,000 people) compared with March 2020, before the impact of Covid-19 had been felt in the economy.
Unemployment has risen to the highest level for almost two years, at 4.1 per cent across the UK, up from 3.9 per cent in the previous quarter. This rise has been driven disproportionately by young people finding themselves out of employment in the last few months, with a record decrease of 146,000 among 18 to 24 year olds in employment.
However, there was an increase in the number of 25 to 64 year olds in employment, with 236,000 people finding work. As a result, despite significant decreases in employment for certain demographics and in certain areas, the overall employment rate has risen slightly in the last quarter.
Redundancies have also increased significantly, up by 48,000 this quarter. While the ONS notes that redundancy figures were historically low prior to this release, the changes now seen in the redundancy rate both annually and quarterly are the largest increases since recession in 2009 following the global financial crash.
The areas with the highest levels of unemployment
North East: 5.2% (no change)North West: 3.5% (-0.6)Yorkshire and The Humber: 4% (+0.1)East Midlands: 4.4% (+0.7)West Midlands: 4.4% (-0.4)East: 3.7% (+0.1)London: 5% (+0.4)South East: 3.5% (+0.5)South West - 3.8% (+0.8)Wales - 3.1% (+0.1)Scotland - 4.6% (+0.1)Northern Ireland - 2.9% (+0.6)UK - 4.1% (+0.2)
While unemployment rates are currently highest in the North East, followed by London and Scotland, the areas which have seen the largest increases in the unemployment rate over the last quarter are the South West, East Midlands and Northern Ireland.
Though they are still dealing with relatively high rates of unemployment, the North West and West Midlands both recorded notable decreases in the unemployment rate over the last quarter.
Commenting on the ONS statistics, Head of Economics for the British Chamber of Commerce, Suren Thiru, said, “Despite the slight rise in the unemployment rate, the furlough scheme continues to limit the pandemic’s full impact on headline job figures.
“With many firms still facing waves of cash flow problems, rising costs and an uncertain economic outlook, it is probable that unemployment will escalate sharply as government support winds down.
“To help avoid a damaging cliff edge for jobs more must be done to help firms keep staff on through this deeply challenging period.”