Slowly but surely, forecasts for unemployment in the UK have been revised downwards. Alongside Rishi Sunak’s Budget earlier this month, the Office for Budget Responsibility significantly changed their prediction for peak unemployment: from the 11.9 per cent predicted in the July forecast down to 6.5 per cent. This was spurred on by an extension of the furlough scheme, a growing economic resilience to lockdowns and, of course, the spectacular rollout of the vaccines (over half the adult population has now been vaccinated with at least one dose).
But the latest update from the Office for National Statistics, published today, has provided an early surprise. The headline unemployment figure has fallen slightly again: from 5.1 per cent in the three months leading up to December 2020, down from five per cent in the three months up to January 2021.
This stabilisation in the unemployment rate, especially over a period that saw virus cases rising and lockdown measures renewed, is being chalked up to the furlough scheme. This is currently estimated to be supporting just under five million employees while many sectors are forced to remain shut down. Compared to the rest of Europe, the UK’s unemployment rate continues to sit on the lower end of the spectrum, despite still being under one of the strictest lockdowns in the developed world.
Even if this slight fall turns out to be a blip – the consensus is that unemployment will be going up this year, as furlough eventually comes to an end and we discover where the economy has adjusted to – today’s data update is a good sign. It suggests the UK stands a decent chance of avoiding mass unemployment, as was originally predicted when the crisis hit.