Official figures have shown a surge of 856,500 people submitting benefit claims last month as the coronavirus crisis took its toll on jobs.
The update from the Office for National Statistics (ONS) showed the so-called claimant count, measured through Universal Credit applications, at its highest level since 1996 at 2.1 million in total.
The growth marked the largest monthly leap in claims on record, the ONS said.
The data mainly covered the first three months of the year as COVID-19 first struck UK shores ahead of the lockdown, imposed since 23 March, which has crippled large parts of the economy.
The report showed unemployment increased by 50,000 to 1.35 million over the three month period as the government and Bank of England scrambled to protect businesses and jobs through a range of support measures including the Job Retention Scheme.
Shortly after the ONS data was released, the Treasury confirmed it was expanding the Coronavirus Large Business Interruption Loan Scheme (CLBILS) to enable larger firms to access up to £200m from next week – up from £50m.
All such help will be welcomed as ONS “experimental” data, collated with HM Revenue and Customs (HMRC), showed the number of UK paid employees fell by 1.6% in April compared to March.
The ONS said it was an early indication of what was to come.
Jonathan Athow, its deputy national statistician for economic statistics, said: “While only covering the first weeks of restrictions, our figures show COVID-19 is having a major impact on the labour market.
“In March employment held up well, as furloughed workers still count as employed, but hours worked fell sharply in late March, especially in sectors such as hospitality and construction.
“Through April, though, there were signs of falling employment as real-time tax data show the number of employees on companies’ payrolls fell noticeably, and vacancies were sharply down too, with hospitality again falling steepest.”
The ONS reported that the jobless rate actually fell to 3.9% in the January-March period from 4% the previous month.
This was aided by a rise of 211,000 in the number of people in employment.
However, the Office for Budget Responsibility has warned that under a scenario it has compiled the rate could surge to 10% in the current three months to June – the second quarter of the year – despite the furlough scheme currently paying the wages of at least 7.5 million people.
Tej Parikh, chief economist at the Institute of Directors, responded: “Even before lockdown, coronavirus was threatening to take the shine off the UK’s sterling jobs record, and initial estimates for April don’t make for easy reading.
“It’s clear that without the government’s furlough scheme, the picture would have rapidly deteriorated even further.”
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