The number of Britons seeking jobless benefits spiked the most on record last month as the coronavirus lockdown sent shock waves through the UK economy.
Jobless claims rose 856 500 to more than 2 million in April, the Office for National Statistics said Tuesday. The claimant count rate climbed to 5.8%, the highest in more than two decades. The figures include some people who are still working but have experienced a loss of earnings.
The shutdown of the economy since March 23 is taking a heavy toll, pushing the UK into what could be its deepest recession for three centuries. While unemployment is forecast to rise, the government’s furlough program has saved about 7.5 million jobs, limiting the damage to the labor market.
In a further move to support Britain’s beleaguered businesses, the Treasury announced Tuesday it extended the maximum loan size available through the Coronavirus Large Business Interruption Loan Scheme to £200 million - a fourfold increase from the previous level.
Firms borrowing more than the original £50 million will be subject to restrictions on dividend payments, senior pay, bonuses and share buy-backs for the duration of the loan, the Treasury said.The ONS report showed the labour market was in good shape going into the crisis, with the unemployment rate at just 3.9% in the first quarter. Employment surged by 210 000 in the period, though furloughed workers are counted as being employed.
Yet a sharp drop in vacancies signals trouble ahead. Vacancies fell 170 000 in three months to April, the biggest drop since the series began in 2001. Job openings had all but collapsed entirely by the time the UK’s lockdown was announced, according to research from the Institute of Fiscal Studies, with the decline coming across the wage distribution.
Meanwhile, hours worked fell 25% in the final week of March, the most since weekly data began in 2008, and tax data for April showed paid employees fell 1.6% from a month earlier. Both the Office for Budget Responsibility and the Bank of England see unemployment more than doubling to around 10% by June, the highest for over a quarter century.
That would take the jobless total above 3 million for the first time since the de-industrialisation of Britain under Margaret Thatcher in the 1980s.
It’s a picture unfolding around the world. In the US, jobless claims have remained in the millions for the past eight weeks. The UK claimant data was collected up to April 9. In a separate report, the Resolution Foundation said that the Britain is experiencing an uneven living standards crisis, with young and older workers most likely to have lost work or had their earnings reduced.