UK jobless claims jumped 70% in April as the coronavirus hit employment

The number of people claiming unemployment benefits in the U.K. soared in April, as the coronavirus outbreak created mass job losses in the country, the latest data showed. U.K. jobless claims rose by 856,500 to 2.097 million, the Office for National Statistics (ONS) said on Tuesday, representing a monthly increase of 69.1%. A Reuters poll of economists had produced a median forecast for an increase of 676,500 in the claimant count.

The ONS noted, however, that enhancements to “Universal Credit” (a social security payment designed to simplify the benefits system by rolling six benefits into one payment) as part of the U.K. government’s response to Covid-19 meant that an increasing number of people became eligible for unemployment-related benefit support, although they were still employed.

The U.K.’s unemployment rate came in slightly higher at 3.9% in the January-March period, although that time period covered only one week of the lockdown (imposed in the U.K. from March 23). The rate was up 0.1 percentage points from a year earlier and was 0.1 percentage points higher than in the last quarter of 2019.

The U.K. has sought to encourage businesses to retain staff amid the coronavirus pandemic with its furlough scheme, or “Coronavirus Jobs Retention Scheme’ (CJRS). In this, the government provides a grant to employers to cover 80% of an employee’s salary, up to a maximum of £2,500 ($3,059) per month. The scheme has been popular and has been extended to the end of October.

Kallum Pickering, senior economist at Berenberg Bank, said Tuesday that despite widespread take-up of the CJRS, he expects the unemployment rate to jump to a high of around 9.5% in the late second quarter from the 3.9% rate in March.

UK jobless claims jumped 70% in April as the coronavirus hit employment, CNBC, May 19