LONDON (Reuters) – Britain’s unemployment rate hit its highest in nearly five years in the three months to November when coronavirus cases began to rise for a second time and most of the country returned to a partial lockdown.
Layoffs touched a record high, with the unemployment rate reaching 5%, the highest level since mid-2016, according to official data, although the increase was slightly weaker than economists’ forecasts.
There were some signs of a limited recovery in December, when lockdown measures eased, although there was likely to be a deterioration in early 2021, as tougher lockdowns closed schools and closed most non-essential businesses to the public.
December tax data showed an increase of 52,000 in the number of employees on corporate payrolls from November, but there were 828,000 fewer workers on payrolls compared to February.
Economists said the data showed the labor market was holding up better than many forecasters had feared.
The unemployment rate was cut through the government job retention plan, which supported 2.4 million jobs as of October 31, down from a peak of 8.9 million in May.
The program is Britain’s most expensive economic support measure for Covid-19, costing £ 46.4 billion through mid-December, and is due to end on April 30th.
“This crisis has passed for much longer than any of us had hoped – every job I lost as a result is a tragedy,” Finance Minister Sunak said after Tuesday’s statements. “We throw everything we have in support of companies, individuals and families.”
Tej Parik, chief economist at the Institute of Directors, urged Sunak to support jobs in his budget on March 3.
“The recent shutdown will only put more pressure on companies with balance sheet problems, which means that more jobs are likely to be lost in the coming months,” Barrick said.
The number of workers decreased by 88,000 in the three months to the end of November, the lowest drop since the start of the epidemic and less than the 100,000 decline that economists expected in a Reuters poll.
Bank of England Governor Andrew Bailey said this month that he believes the core unemployment rate is higher, as the official definition excludes people without a job who have temporarily postponed their search for work due to the pandemic.
The data showed that wage growth rose 3.6% year-on-year, the largest increase in more than a year.
But the Office for National Statistics said the increase largely reflected how the brunt of job cuts and lost wages had fallen on workers in lower-wage sectors and on part-time workers. She added that the base wage growth was less than 2%.