UK unemployment reaches highest level for two years

The economic fallout from the coronavirus pandemic is continuing to emerge in the UK, with new figures showing that unemployment has risen to its highest level for two years.

In the three months to July the UK unemployment rate grew to 4.1%, representing about 1.4 million people out of work, according to the Office for National Statistics (ONS). This is 104,000 more than a year earlier and 62,000 more than the previous quarter.

Young people were particularly hard hit, with the biggest drop in employment seen among those aged 16 to 24.

The monthly report also shows that redundancies increased by 58,000 on the year and 48,000 on the quarter to 156,000 — the fastest rise since the financial crisis.

It comes as businesses are preparing for the end of the furlough scheme, which has helped 9.6 million people retain their jobs during lockdown and prevented a sharper rise in unemployment so far.

Under the Coronavirus Job Retention Scheme, the UK Government initially paid 80% of people’s wages. This was reduced to 70% at the start of September, with employers expected to make up the remainder of pay, and the scheme is scheduled to end altogether on 31 October.

Chancellor Rishi Sunak has ruled out extending the scheme past the end of next month.

Commenting on the latest figures, ONS director of economic statistics Darren Morgan said that as parts of the economy reopened in July, fewer workers were on furlough and there was a rise in average hours worked.

However, he added, “with the number of employees on the payroll down again in August and both unemployment and redundancies sharply up in July, it is clear that coronavirus is still having a big impact on the world of work.”