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Coronavirus unemployment rates
Current projections estimate UK unemployment numbers higher than those of the Great Depression.
The year 2020 has offered many surprises, including COVID-19. Once it hit Europe and the UK, measures were taken to protect the citizens of each country. While social distancing and quarantine are saving lives, they are also devastating the tourism industry, companies and the economy. As a result, we might be looking at an unemployment rate of 20% by the end of May.
Coronavirus has hit the UK hard with the lockdown leading to many redundancies, furloughing or less freelance work available. A lot of people are having to dip into savings to avoid going into debt. The government has also introduced measures like payment holidays to help people. We have looked into how the coronavirus pandemic has affected the number of Brits who are unemployed, furloughed and claiming Universal Credit.
- Unemployment: Before the coronavirus pandemic hit the UK, the unemployment rate was 3.80%, but may be surging up to 20%* by the end of May.
- Furlough: Instead of being let go, an employer can put their employees on furlough. This means the government will cover 80% of the employees’ salaries as financial relief. Those businesses that have closed down during the lockdown have furloughed 77.60% of their employees.
- Universal Credit: While unemployed, you can apply for Universal Credit for financial help. 1,246,900 Universal Credit claims were made in March 2020, which is 17.58% more than in March 2019.
Before the onset of the virus, the UK unemployment rate for the 3 months leading up to February 2020 was estimated at 3.8%, largely unchanged compared with a year earlier. However, the drastic measures aimed at reducing the spread of the virus could have a potentially devastating impact on the employment of millions of Brits.
Counting the 5 million people who are on furlough as unemployed, that figure will be added to the current 1.29 million people (3.8% of Brits) who do not have a job. This means that the unemployment rate can potentially surge to 20% by the end of May, which would be the highest unemployment rate within the last 50 years of available records.
Unemployment compared to other historical recessions
Most people are still acutely aware of the devastating effects of the 2008 economic crisis, which cost millions of Brits not only their jobs, but their savings as well. The crisis represented the UK’s severest recession since the 1950s, leading to an unemployment rate of 8% in the years that followed. However, if the current trend continues, unemployment rates are expected to rise to as high as 20%. This is close to double the rate during the 1990 recession and almost a third higher than during the Great Depression.
|Time period||Unemployment percentage|
|The Great Depression||15.40%|
|Early 1980s recession||11.50%|
|2008 financial crisis||7.60%|
|2020 COVID pandemic||20%|
Instead of getting fired, one can join the furlough scheme, which pays 80% of a worker’s salary up to a cap of £2,500 per month to stay at home. When on furlough, you’re not allowed to work for the company, but you’re still hired.
According to ONS data collected over the first 2 weeks of the government-mandated shutdown, 25% of businesses reported that they had temporarily closed or paused trading. Out of the 75% that continued operating, an average of 14.30% of the workforce has been furloughed under the terms of the government’s job retention scheme. On Monday 20 April, more than 140,000 firms applied for the scheme.
The British Chamber of Commerce also reported in its weekly COVID-19 tracker poll that the proportion of firms that have furloughed at least some staff has increased from 66% on the second week of April, to 71% by the following week.
For those businesses that are still operating and trading, 9.9% of their employees are on sick leave and 75.50% of all employees are still employed and working. 46.10% of all Brits who are still employed report that they are working from home.
|Put on furlough leave||Other and off sick or in self-isolation||Made redundant||Working as normal|
|Companies who hasn't closed||14.30%||9.90%||0.20%||75.50%|
|Companies that has closed or paused trading||77.60%||22.00%||0.50%||0.00%|
Universal Credit claims
The Department of Work and Pensions experienced a tenfold increase in Universal Credit application in the last 2 weeks of March, with 950,000 successful claims being made. The department is expected to report even higher numbers by the end of April 2020. Universal Credit is a monthly payment from the government to those who are on a low income or unable to find work.
Looking at the total figures for March 2020, 1,246,900 benefit claims were filed by unemployed Brits. This is an increase of 17.58% compared to March 2019, when 1,060,500 claims were made. The standard monthly allowance for Universal Credit is £342.72 if you’re under 25 years old and £409.89 for those over 25. You can also apply for additional benefits that will add to the amount you get, for example, if you have children or high rent costs.
|Year and month||Number of benefit claims|
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