Unemployment rate hits five-year high

More than 1.7m people are now unemployed as the pandemic rips through the UK's jobs market, official figures revealed on Tuesday.

The Office for National Statistics figures for the three months to November showed an extra 202,000 unemployed over the quarter – pushing the jobless rate to 5pc for the first time since 2016. Redundancies jumped by 168,000 over the quarter, to a record high of 395,000.

The actual damage is likely to be far higher as the ONS estimates that 4.1m workers were "temporarily away from work" during the period thanks to the extension of the furlough and the UK's second lockdown. 

Vast Government support has so far held job losses in check but the day of reckoning had been "postponed" due to the furlough, Samuel Tombs at Pantheon Macroeconomics said. 

He warned: "For now, the Coronavirus Job Retention Scheme is providing struggling firms with a way of temporarily not paying staff, but preserving the option to employ them in future. 

"Nonetheless, the CJRS is due to be wound up at the end of April, and additional measures to support employment that will be announced in the Budget on March 3 probably will not be anywhere near as generous for firms."

Experimental data also showed 828,000 workers dropping off company payrolls since the pandemic began despite a modest improvement in December.

The nation's struggling labour market has also seen the biggest fall in people in work for more than a decade thanks to the pandemic.

Official figures for the three months to November showed the nation's overall employment dropping by 398,000 over the past year - the largest annual decrease since February 2010 as younger workers bear the brunt.

The November shutdown also hit hiring plans as the number of vacancies slowed to 81,000. At 578,000, the overall number is still two-thirds below the pre-Covid peak.

Business groups intensified the pressure on the Chancellor to increase support for companies following the data, including a further extension of the furlough and tax reliefs to cope with the latest lockdown.

Tej Parikh, chief economist at the Institute of Directors, said: "A return to tighter restrictions late last year will have stretched businesses' ability to retain staff.

"It is now crucial that the Job Retention Scheme and other Covid-19 economic support is extended beyond the spring to support employment as restrictions continue. The latest lockdown will have only added further pressure on firms with troubled balance sheets, which means more jobs are likely to be lost in the coming months."