UK jobless rate hits 5.1% as Sunak readies more job support
By Schomberg William and Milliken
LONDON (Reuters) — In the last three months of 2020 the unemployment rate in Britain rose to 5.1%, the biggest in almost five years, but still smaller than without an enormous coronavirus work support system, which Finance Minister Rishi Sunak is likely to broaden next week.
Separate figures from the Office of National Statistics show that in January the number of salaried workers increased from December to 83,000, the second monthly rise, with its highest increase since January 2015.
The unemployment rate — the highest since the first three months of 2016 — was consistent with the average Reuters survey estimate.
The government's Work Retention Program has reduced unemployment and funds nearly one in five workers.
The scheme represents Great Britain's most costly international assistance measure for COVID which would cost an estimated 70 billion pounds (98 billion dollars) by its expected 30 April expiry date.
Yet tax-based estimates reveal that since February 2020 the number of jobs employed in the private sector has declined by 726,000 – equal to just over 2 percent of the population – with the bulk of employment cuts experienced by staff under 25.
The Bank of England said it expects the unemployment rate will increase to close to 8% by the conclusion of the furlough scheme in mid-2021.
In a March 3 budget speech, Sunak is scheduled to declare an expansion of his funding for jobs, at least in the sectors worst hit by the lockdowns of the government.
"At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery," Sunak said after Tuesday results.
Prime Minister Boris Johnson revealed on Monday his intention to ease the lockdown in England which will hold some companies shut up until the summer, enabling others to reopen progressively and sooner.
"The outlook for the UK economy is getting clearer and with continued support from the Treasury, it is likely the Bank of England's peak unemployment forecast of 7.75 percent will prove too pessimistic," said Jon Hudson, fund manager of Premier Miton.
Samuel Tombs, Pantheon Macroeconomics analyst, said he felt the unemployment rate would cross 6% in the summer.
During the duration from three months through to January, the ONS announced that the number of vacancies was 26 percent lower than last summer, when vacancies were almost 60 percent lower, although the rate of change slowed in the past few months.
Since 2008, wage growth has been the fastest.
In the October-December period, the overall compensation before bonuses grew by 4.7 percent relative to the same three months of 2019.
The raise in salaries partially reflects how the gross loss from unemployment has dropped for people who work in low-paid employment in areas such as hospitality, and the ONS said incomes are likely to rise below 3% if this impact is removed.
The UK entered a new COVID lock-down on 5 January as a result of an increasingly increasing death toll of 120,000, Europe's highest.
($1 = PLN 0.7108)
(William Schomberg and David Milliken reporting; Kate Holton editing)