Friday, December 9, 2022

UK redundancies hit record high as job market slumps in third quarter By Reuters


© Reuters. Morning rush hour in London

By Andy Bruce and David Milliken

LONDON (Reuters) – British employers made a record number of staff redundant in the third quarter and the jobless rate jumped, according to official data that show the labour market declined rapidly before finance minister Rishi Sunak made a U-turn on COVID support measures.

A record 314,000 British workers were made redundant in the three months to September, 181,000 more than in the second quarter, the Office for National Statistics said on Tuesday.

The unemployment rate rose to 4.8%, as expected in a Reuters poll of economists and the highest rate since the three months to November 2016.

While the public and investors were cheered on Monday by news that an experimental COVID-19 vaccine from Pfizer (NYSE:) and BioNTech was more than 90% effective in trials, the ONS data showed some hard months lie ahead for many Britons.

“September’s rise in the unemployment rate from 4.5% in August to 4.8% suggests that the previous scaling back of the furlough scheme took its toll,” economist Ruth Gregory from the consultancy Capital Economics said.

“And with the second lockdown set to send the recovery into reverse, the unemployment rate may yet climb to about 9% next year.”

Employment fell by 164,000 during the quarter, the data showed – a sharper drop than the Reuters poll consensus of 148,000.

The Bank of England last week forecast that Britain’s unemployment rate would reach 6.3% by the end of this year and peak at nearly 8% in the second quarter of next year.

Last week finance minister Rishi Sunak extended his costly coronavirus furlough scheme, which provides 80% of the pay of temporarily laid-off workers, until the end of March and he announced billions of pounds in other forms of support.

Sunak said the figures “underline the scale of the challenge we’re facing”.

“I want to reassure anyone that is worried about the coming winter months that we will continue to support those affected,” he said in a statement after the data was published.

The BoE expects around 5.5 million employees will need support from this programme during an England-wide lockdown this month, up from just over 2 million in October.

Sunak’s critics have said a series of U-turns over employment support policy made it hard for companies to plan ahead at the expense of many jobs.

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