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Unemployment rises to a five-year high at 5.1%

Written by: Emma Lunn
The total number of Brits who are jobless now stands at 1.74 million, according to the Office for National Statistics (ONS).

The UK unemployment rate, estimated at 5.1%, is 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.

It’s the highest rate in almost five years, but the jobless rate is still lower than during the financial crisis a decade ago, potentially due to the effect of the furlough scheme.

There were 121,000 more people out of work in in the three months from October to December 2020, compared to the three-month period before that.

The estimated employment rate for people aged between 16 and 64 years had generally been increasing since early 2012. However, there has been a decrease since December 2019 to February 2020, coinciding with the start of the coronavirus pandemic.

For people aged between 16 and 64 years, for October to December 2020 the estimated employment rate was 75%. This is 1.5 percentage points down on the same period the previous year and 0.3 percentage points down compared with the previous quarter (July to September 2020).

During this period, the estimated employment rate for men was 78.2%, 2.4 percentage points down on the same period the previous year.

The estimated employment rate for women was 71.8%, 0.6 percentage points down on the same period the previous year.

Since February 2020, the number of payroll employees has fallen by 726,000. New analysis by age band shows that the 18 to 24 years age group has seen the greatest decrease in payrolled employees since February 2020.

Jack Kennedy, UK economist at the global job site Indeed, said: “The prime minister has described his plan to ease England’s lockdown restrictions as a ‘one-way road to freedom’. But the weakness of the labour market reveals just how long and hard that road will be.

“Nearly three quarters of a million fewer people are in work compared to this time last year, and the unemployment rate continues to creep up. Among the UK’s 1.7 million unemployed people, competition for jobs is intense. Official data shows that in the three months to the end of January, the number of vacancies was 26% down on a year ago.”

Derrick Dunne, CEO of Beaufort Investment, said: “The amount of people unemployed in the UK has hit a five-year high, reaching 5.1% for the three months ending December. This is already 1.3% greater than this time last year, but experts are predicting job losses could peak at 7.5% when the government’s furlough scheme comes to an end.

“While the prime minister’s announcement put real hope on the horizon, we cannot ignore the uncertainty that remains for those in the hospitality and entertainment sectors – and it’s unlikely any new measures introduced at next week’s budget will be anywhere near as generous as the furlough scheme.

“Recovery will come, but it’s going to take time. For now, investors should be prepared to continue with the ‘two steps forward, one step back’ approach they will be well-accustomed to by now.”

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