U.K. Employment Sees Biggest Slump Since The Financial Crisis

TOPLINE

As the economic toll of the coronavirus crisis deepens, the U.K. has recorded its biggest quarterly drop in employment since the depths of the recession more than a decade ago, with 220,000 fewer people in work between April and June, the U.K.’s statistics agency revealed.

KEY FACTS

Big number

3.9%. That’s the U.K’s current rate of unemployment, which is around the same as last year as a result of people being on furlough, while people out of work “are not currently looking for work”, the ONS said. However, that could surge to 7% next year following inevitable job losses, according to Capital Economics analyst Ruth Gregory.

Key background

Businesses particularly in hard-hit sectors like travel and hospitality are still counting the cost of extended shutdowns, and cuts to capacity and lower customer numbers due to social distancing and quarantine measures. As a result, businesses feeling the pinch have lined up in recent weeks to announce upcoming job cuts, with more expected to follow as government-backed measures to stem the rising unemployment come to an end. In the U.S., about 1 in 5 workers—30 million people—are receiving unemployment benefits from the government, while the unemployment rate is at around 11%, up from 3.5% in February. 

What to watch for

Since the government’s job retention scheme was announced in March, some 9.4 million people have been placed on furlough. The scheme will wrap up at the end of October, with millions at risk of losing work altogether as analysts warning of a “cliff-edge” scenario.

The U.K. economy is expected to be declared officially in a recession on Wednesday, as the ONS is expected to announce that GDP fell 21% in the second quarter. 

Further reading

Labour market overview, UK: August 2020 (Office for National Statistics)

UK to plunge into deepest slump on record with worst GDP drop of G7 (The Guardian)

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