OECD says UK unemployment could peak near 15%
Unemployment in the UK could reach almost 15% by the end of 2020 if the economy is hit by a second wave of Covid-19, the Organisation for Economic Cooperation and Development warned.
The OECD said UK unemployment would hit a record high of up to 11.7% in 2020 even without a second wave of coronavirus and only fall back to 7.2% in 2021. If there is a second wave in 2020 then UK unemployment could peak at 14.8% from a current level of 3.9%, the international thinktank said.
Even under the more benign scenario the UK would be hit harder than France, Germany, Italy and the average for the OECD's 37 members. With no second wave the OECD unemployment rate is forecast to reach 9.4% in 2020. The OECD has already predicted the UK will suffer the worst recession in the developed world in 2020.
The OECD's secretary-general, Angel Gurría, said: “Building on the swift and decisive initial response to the Covid-19 crisis, countries now need to do everything they can to avoid this jobs crisis turning into a full-blown social crisis. Macroeconomic policies must remain supportive through the crisis to minimise the risk of a prolonged slump and a lost generation of young people whose labour market prospects are durably harmed."
The OECD made its warning as the UK government tries to open up the economy and reduce expensive government support for furloughed workers. Shops, pubs and restaurants are allowed to open with social distancing measures but office workers must still work from home where possible, the government has said.
This limited relaxation of restrictions has raised fears of a further wave of coronavirus cases as groups of drinkers and pleasure seekers have failed to stick to distancing requirements. The government's plan to reopen schools in September could accelerate the spread of the disease as the winter months approach, some experts have warned.
Economists and opposition MPs have also warned that withdrawing support for more than 9m workers' wages could cause a torrent of job cuts in sectors such as hospitality and aviation. Even before support is reduced, companies have announced many thousands of job cuts including British Airways, Rolls-Royce and Pret a Manger.