london skyline

United Kingdom Unemployment March 2020

United Kingdom: Labor market stays robust in Q1, but more recent data is bleak

According to the ONS, in January–March the unemployment rate ticked down to 3.9%, employment grew by 211,000 and regular nominal pay growth (excluding bonuses) ebbed to 2.7%. Despite the decline in wage growth, the figures suggest the labor market was in solid health in the first quarter.

However, more recent figures, taking into account the impact of coronavirus and the nationwide lockdown imposed in late-March, are far less encouraging. Preliminary data for April shows declines in employment and wages in annual terms, while the number of benefit claims almost doubled to just over 2 million in the same month, suggesting a sizeable rise in unemployment. However, the government’s furlough scheme subsidizing employees’ wages should temper the number of layoffs.

The unemployment rate is seen peaking in Q2 at slightly over 8% before declining thereafter. Regarding the longer-term outlook, Kallum Pickering from Berenberg comments: “UK labour market fundamentals are positive. Participation is high, regulations and frictions are low. Workers are by and large well skilled. We see little risk that the coronavirus recession could lead to a permanently higher equilibrium rate of unemployment. […] However, the initial pace of the jobs recovery may be modest. Continued virus uncertainty including the risk of renewed lockdowns if a second wave emerges, as well as noisy UK-EU trade negotiations and the risk of a disorderly exit from the single market at the end of the year, will weigh on business confidence in H2. This may dampen the pace of re-hiring.”

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest