Unemployment Ticks Up To 5.1%

The latest official labour market statistics, showing the unemployment rate rose to 5.1% in the three months to December.

Tej Parikh, Chief Economist at the Institute of Directors, said:

"As the pandemic lingers, jobs losses have continued to tick upward.

"Tight restrictions over the winter months will have eaten into many businesses' reserves, forcing them into difficult decisions on their staff. Meanwhile, cash-strapped firms have relied on the furlough scheme to help retain employees, and without it unemployment would be significantly higher.

"The vaccine roll-out and reopening of the economy this year should help put a ceiling on job losses, but the Government will need to provide ongoing help. With restrictions remaining in place over the coming quarters, the Chancellor must move quickly to extend the Job Retention Scheme and other Covid-19 economic support beyond the spring.

"The Budget next week needs to provide a bridge for businesses to begin the process of rescaling and rehiring. A one-off relief for employers' National Insurance contributions would boost cashflow, and support job retention and creation. Financial incentives to support training and reskilling will also help firms to adjust and grow quickly, supporting the recovery.

The BCC Head of Economics Suren Thiru said:  

“While the furlough scheme is limiting job losses, the rise in unemployment and decline in employment levels are further evidence that coronavirus continues to weaken the UK labour market.

“With firms facing a renewed cash crisis amid the current lockdown and the prospect of several more months of diminished demand and revenue before many can fully reopen, substantial job losses maybe inevitable if the support schemes wind down as planned.

“Although the government’s roadmap provides a way forward, the lack of clarity over the future path of fiscal support has left a damaging cliff edge for jobs and livelihoods.

“It is vital that the government support schemes, including furlough and business rates relief, are extended through the summer and wherever possible throughout 2021 to help protect jobs and power the recovery.”