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Budget 2021: Unemployment likely to peak at 5.2%

Chancellor Rishi Sunak revealed during the Budget 2021 that unemployment is expected to peak at 5.2%, according to the Office for Budget Responsibility (OBR).

As a result, Sunak said this will mean: “over two million fewer people will be out of work than previously feared.”

The OBR expects gross domestic product (GDP) to expand by 6.5% this year, compared to the 4% forecast at the Budget 2021 in March.

This is below what the Bank of England has predicted, which is 7.4% of growth.

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UK GDP rose by 5.5% between April and June, compared with the first three months of the year, more than any other country within the G7 group.

Rising inflation has been predicted to reach 3.1% and likely to rise further.

Sunak said this is due to global factors, such as the world opening up after the pandemic and demands for goods increasing.

Addressing Parliament, Sunak said if recovery is strong, the government will be able to return to spending 0.7% of GDP on overseas aid by 2024, and that spending is growing by 3.8% a year in real terms.

By Jake Carter

Source: Mortgage Introducer

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UK economy recovering strongly as lockdown measures are eased

Further evidence emerged Tuesday to show that the UK economy is recovering strongly, with the number of people on payroll increasing as coronavirus lockdown measures are eased.

The Office for National Statistics found that the number of payroll workers rose by 97,000 between March and April, a period when some lockdown restrictions were eased. At the end of March, pubs and restaurants were allowed to reopen in an outdoor setting, for example.

The reopening meant many workers who had been idle over the previous months of lockdown could return to their jobs even though activity levels weren’t as high as they would have been if indoor serving was allowed.

Though the most recent figures show an improvement, the U.K. has clearly seen jobs lost during the pandemic, with 772,000 fewer people on the payroll than before it struck in spring 2020.

The statistics agency also found that the overall rate of unemployment in the U.K. fell once more, to 4.8 per cent in the three months to March, down from the equivalent figure for February of 4.9 per cent.

This came despite the country being in tight lockdown in the first three months of 2021, with the statistics agency saying many unemployed were no longer looking for work.

The agency also said there were 1.6 million people unemployed in the three months to March, down 121,000 on the previous three-month period.

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The figures add weight to the Bank of England’s recent prediction that the anticipated peak in unemployment will be far lower than anticipated as lockdown restrictions are eased further following the sharp fall in coronavirus infections and the rapid rollout of vaccines. It now expects the jobless rate to peak at 5.5 per cent, against 7.75 per cent previously.

On Monday, the lockdown was eased further across most of the U.K., with pubs and restaurants allowed to reopen indoors. Cinemas and theaters were also allowed to reopen while the ban on foreign holidays was partially lifted, though the number of destinations deemed safe remains limited.

The extension of the job retention program, which has seen the government pay the bulk of workers unable to work because of lockdown restrictions, has helped soften the blow to unemployment. The growth rebound, which the Bank of England expects to hit 7.25 per cent this year, is set to see most furloughed employees return to work when it ends.

The Resolution Foundation think tank cautioned though that the labor market is unlikely to return to its pre-crisis structure given fundamental changes in the way people work and shop.

Adapting to this changed world will be a key challenge for workers, and policy makers, in the years ahead,” said Hannah Slaughter, economist at the Resolution Foundation.

Source: Business Standard

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UK unemployment falls for first time in Covid-19 pandemic

Unemployment in the UK has fallen for the first time since the coronavirus pandemic began despite the toughest lockdown measures since the first wave spread a year ago, according to official figures.

The Office for National Statistics said the unemployment rate fell back slightly to 5% in the three months to January, representing 1.7 million people – down from 5.1% in the three months to December. City economists had forecast a rise in the jobless rate to 5.2%. The government’s furlough scheme continues to support the jobs market, with millions of people still on the emergency wage scheme.

The latest snapshot showed a 68,000 increase in the number of workers on company payrolls in February, compared with January, as the roadmap out of lockdown restrictions boosted prospects. It was the third consecutive monthly increase.

However, the number of people on payroll has plunged by 693,000 since the start of the pandemic, with younger workers under the age of 25 accounting for 60% of the jobs lost since February 2020. More than half of the fall was in hospitality, while almost a third was in London.

The unemployment rate remains 1.1 percentage points higher than a year ago before the pandemic struck. Figures compiled by the ONS also showed the number of non-UK born workers in the final quarter of 2020 was half a million lower than a year ago.

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Suren Thiru, the head of economics at the British Chambers of Commerce, said furlough and greater clarity provided by the government’s unlocking roadmap, as well as firms adapting to lockdown restrictions, had helped the jobs market.

“Extending furlough will limit the peak in job losses. However, with many firms struggling with the damage done to their cashflow by a year of Covid restrictions, unemployment is likely to remain on an upward trajectory until well beyond a full reopening of the economy,” he said.

The number of workers on furlough has risen to almost 5 million as the toughest lockdown measures since the first wave of the pandemic weigh on the economy. After repeated attempts to close the scheme last autumn when redundancies were rising at the fastest rate on record, Rishi Sunak used this month’s budget to extend furlough until the end of September.

Unemployment is expected to peak at 6.5% at the end of this year after the scheme ends, according to forecasts from the Office for Budget Responsibility.

The chancellor said supporting and creating jobs had been his focus throughout the pandemic. “The continued success of the vaccine rollout provides us with hope for the future, and through our plan for jobs, we will continue to support people throughout the months to come,” he said.

Source: The Guardian

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‘UK unemployment figures are missing at least 300,000 people’

Official unemployment figures are missing hundreds of thousands of people, according to a study backed by former Prime Minister Gordon Brown.

An analysis by the Alliance for Full Employment (AFFE), called The Ongoing Wave, has urged a review of official measures of employment and unemployment, as new jobless figures are published this week.

The study claimed that at least 300,000 people were being missed because of the way data was collected and that this could lead to chancellor Rishi Sunak failing to meet the UK’s true needs with the rescue packages for the UK economy being drawn up.

Official figures suggest unemployment in the UK stands at about 1.7 million, about 4.9% of the working population. However, tax records and benefit claims appear to indicate the actual figure could be more than 2 million and likely to rise to 3.5 million later this year, the study claims.

Brown warned that the gap between the official figures and reality would have “devastating real-world consequences” and was a huge error.

He said the government was “spending too little this year on employment programmes like Restart and Kickstart for the young and on encouraging firms to take on apprentices and deliver traineeships. This new evidence means government must launch a far more ambitious and extensive job-creation programme to avert an unemployment tsunami.”

The AFFE said the pandemic had rendered the Office for National Statistics (ONS) conceptual definition and method of measuring unemployment ineffective and added that the figures “do not currently provide a reliable guide for economic assessment of developments in the labour market and policy”.

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The official figure for unemployment is based on the Labour Force Survey conducted by the ONS.

The analysis highlighted PAYE tax records that counted the number of paid employees, revealing that the number of paid jobs was now 785,000 lower than the official employment figure.

It claimed tax details showed that just under 300,000 jobs in hospitality, 160,000 in wholesale and retail, and 89,000 in arts, entertainment and recreation were not accounted for in official figures. The departure of foreign nationals who had lost work and were leaving the country could not account for the loss in roles, said the study.

According to the AFFE, the Workforce Jobs (WFJ) Business Survey data released in December covering September 2020 and earlier periods showed a fall in the number of employee jobs of 677,000 between March 2020 and September 2020. This, it said, implied unemployment of 6%.

Workers with no qualifications were over twice as likely to work in a shutdown sector than those with a degree level qualification, stated the study. Workers aged under 30 were over twice as likely to work in a ‘shutdown sector’ than those aged 30 or over.

A fifth of women (20.3%) worked in a shutdown sector, compared with 14.7% of men. “As worryingly – and even before the Brexit effect – the UK manufacturing sector appears to have lost almost 5% of its workforce according to PAYE data,” said the study.

The report stated that plans to cut universal credit should be reversed and the Kickstart programme designed to help young people find work needed to be expanded.

The ONS said: “The pandemic has brought unprecedented challenges of measurement, but the ONS remains confident that the key headline rates we report in our labour market statistics release provide reliable and timely insight on what is happening in the economy.

“In collaboration with HM Revenue and Customs, we have improved the timeliness and the level of detail of data published from the PAYE Real Time Information system, as the report notes, and are widening what we publish from this source. It is only because the Office for National Statistics publishes a wide range of labour market measures that the analysis in this report is possible and, as the report also notes, we have ourselves drawn attention to some of the differences between these measures.”

By Adam McCulloch

Source: Personnel Today

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