The number of people claiming unemployment benefits increased by the most since records began in April to reach almost 2.1 million, according to official figures capturing the onset of the coronavirus crisis.

In a reflection of mounting job losses across the country, the Office for National Statistics said about 856,500 people signed up for universal credit and jobseeker’s allowance benefits in April, driving up the overall UK claimant count by 69% in a single month.

The surge marked the biggest monthly increase since comparable records began in the early 1970s, while the overall number of people claiming for benefits due to unemployment has risen above 2 million for the first time since 1996.

UK unemployment claims

Economists said the dramatic increase in unemployment would have been much higher without the government’s emergency wage subsidy scheme. About 8m jobs have been protected at about 1m companies in the opening weeks of the programme, in which the government pays 80% of workers wages up to £2,500 per month. The ONS does not count furloughed workers as unemployed.

Unemployment is expected to steadily climb in the coming months as Britain grapples with the deepest recession in more than three centuries, while the Treasury has also been warned the gradual winding down of its emergency support from August could trigger a fresh wave of job losses.

Tej Parikh, the chief economist at the Institute of Directors, said: “While furloughing is holding off some job losses for now, it’s not yet clear how firms will react as the scheme changes in August and as social distancing continues.”

“Many companies will still be in the middle of a cashflow crisis, and will struggle with any cost increases. Government faces an onerous task in winding down the scheme without causing too much pain.”

The ONS cautioned that the increased number of people claiming benefits may not be as a direct consequence of unemployment, as the government had expanded eligibility for universal credit in response to Covid-19.

However, the first official attempts to gauge the economic fallout showed the number of employees on company payrolls plunged by 450,000 at the start of April as staff were let go and hiring ceased. The number of vacancies posted by companies looking for new staff also halved.

The Institute for Employment Studies warned unemployment was rising fastest in parts of Britain that were already worst off. It said one in nine residents in Blackpool (11%) are claiming unemployment benefits, up from 7% in March. The number of claims increased most in the north of England and Northern Ireland, and rose the least in the South-east and the east of England.

Tony Wilson, director of the thinktank, said the snapshot probably understated the severity of the crisis as it counted claims up until 9 April. “In reality, unemployment today is likely to already be close to 3 million,” he added.

UK unemployment regions

Government statisticians said the official jobs market figures were yet to catch up with the economy effectively grinding to a halt, after the launch of the nationwide lockdown on 23 March.

Providing a snapshot of the jobs market before Covid-19 struck, the ONS headline unemployment metric fell slightly to 3.9% in the three months to March, marking the lowest level of unemployment since the mid 1970s. The percentage of people in work also reached a joint-record high.

However, early estimates suggested the number of hours worked in Britain fell sharply in the last two weeks of March after restrictions came in, with the amount of time spent working plunging to about 25% below normal levels.

Jonathan Athow, the deputy national statistician at the ONS, said: “This is a huge fall, and evidence of employers either putting staff on furlough and/or cutting the hours of those still working.”

UK unemployment age

He said the sectors with the biggest fall in hours worked were hotels, restaurants and construction, which had recorded the biggest declines in economic activity. Healthcare hours were broadly unchanged.

In a signal of the looming damage for workers’ pay packets, government statisticians said annual wage growth slowed to 1.5% in March, the lowest rate in almost six years. Economists warned there would probably be an outright decline in average earnings within months.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Following one of the weakest recoveries in history from the 2008 financial crisis, average wage packets after inflation only returned to 2007 levels at the end of 2019, marking 12 years without progress for workers.

Employment minister Mims Davies said the latest figures showed the government had built strong foundations in the jobs market before Covid-19 struck, which would help the country to bounce back as lockdown restrictions are lifted.

“Clearly these figures are behind on our current struggle but the impact of this global health emergency is now starting to show – and we’re doing everything we can to protect jobs and livelihoods,” she said.

Contributor

Richard Partington Economics correspondent

The GuardianTramp

Related Content

Article image
UK unemployment reaches four-year high in Covid-19 lockdown
Jobless rate rose to 5%, or 1.7 million people, in three months to the end of November

Richard Partington Economics correspondent

26, Jan, 2021 @10:57 AM

Article image
UK unemployment rises to 5.1% as Covid lockdown freezes economy
Government furlough scheme prevents higher increase in joblessness in December

Phillip Inman

23, Feb, 2021 @7:49 AM

Article image
Extending the UK furlough alone isn't enough to save UK plc in 2021
Amid a likely third wave of Covid-19 and a hard Brexit, a new package of employment and social support is needed fast

Richard Partington

13, Dec, 2020 @2:29 PM

Article image
MPs demand answers over lack of Covid support for self-employed
Too many excluded from government’s furlough and other support schemes, committee says

Richard Partington Economics correspondent

20, Jan, 2021 @12:01 AM

Article image
UK economy poised to recover after Covid-19 second wave
Our latest snapshot of key economic indicators shows the deficit soaring but unemployment holding steady

Richard Partington Economics correspondent

31, Mar, 2021 @5:00 AM

Article image
UK jobless figures give mixed messages – but the crunch is coming
Analysis: firms are adding to their payrolls, but the real test will come when the Covid furlough scheme ends

Larry Elliott Economics editor

23, Feb, 2021 @8:40 AM

Article image
UK unemployment rate falls to 4.9% despite Covid restrictions
Separate figures show 4.7m jobs were furloughed at the end of February

Richard Partington Economics correspondent

20, Apr, 2021 @7:48 AM

Article image
More than a third of UK employers planning to make staff redundant
Report warns of a cascade of job losses as coronavirus furlough scheme winds down

Jasper Jolly

30, Sep, 2020 @11:01 PM

Article image
UK unemployment falls for first time in Covid-19 pandemic
Jobless rate drops to 5% in three months to January, representing 1.7 million people

Richard Partington Economics correspondent

23, Mar, 2021 @4:19 PM

Article image
UK unemployment outlook is grim – it's going to be tough | Larry Elliott
The furlough scheme has given employers breathing space, but its impact will be reduced by autumn

Larry Elliott

16, Jun, 2020 @7:51 AM