UK unemployment rate hits 4.5% as job protection plan is set to end

Britain’s unemployment rate rose by more than expected to 4.5% in the three months to August, its highest in more than three years, even before the end of the government’s broad coronavirus job protection plan.

Britain’s Prime Minister Boris Johnson and Finance Minister (Chancellor of the Exchequer) Rishi Sunak spoke during a media briefing on Monday.

Rishi Sunak reiterated on Tuesday that his priority remained to slow the rising job losses although he is replacing his 50-billion-pound wage subsidy scheme, which expires at the end of this month with a less generous programme.

“I’ve been honest with people from the start that we would unfortunately not be able to save every job,” he said.

Economists polled by Reuters had expected the jobless rate to rise more slowly, to 4.3% from 4.1% in the three months to July.

The number of people in employment fell by 153,000, much higher than a median forecast for a fall of 30,000 in the Reuters poll, and the Office for National Statistics (ONS) revised up sharply its estimate for employment losses in previous months.

“Since the start of the pandemic there has been a sharp increase in those out of work and job hunting but more people telling us they are not actively looking for work,” Jonathan Athow, the ONS’s deputy national statistician, said.

“There has also been a stark rise in the number of people who have recently been made redundant.”

The ONS data showed redundancies jumped by a record 114,000 on the quarter to 227,000, their highest level since 2009 when Britain was in the grip of the global financial crisis.

Prime Minister Boris Johnson introduced a new system of restrictions for England on Monday and a minister said government may have to go further.

The Confederation of British Industry said ramping up the government’s testing regime will be a key component to securing an economic recovery.

There were some positive signs in Tuesday’s data. Tax office figures showed the number of staff on company payrolls rose by a monthly 20,000 in September, slightly reducing the total number of job losses by that measure since March to 673,000.

The number of job vacancies rose by the most on record in the three months to September although the total remained down 40% compared with a year earlier.

The Bank of England has forecast that the unemployment rate will hit 7.5% by the end of the year. But BoE Governor Andrew Bailey on Monday repeated his warning that the economy could prove weaker than the central bank’s forecasts.

Reuters