UK redundancies hit record high as pandemic takes its toll
The UK unemployment rate ticked higher in October while redundancies rose to a record high as the coronavirus pandemic continued to take its toll.
According to figures released by the Office for National Statistics on Tuesday, redundancies came in at 370,000, which was an increase of a record 217,000 on the quarter.
The unemployment rate rose to 4.9% from 4.8%, although this was a little better than expectations of 5.1%. Nevertheless, it's 1.2 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter.
The data also showed that since February, 819,000 fewer people were in payrolled employment.
ONS director of economic statistics Darren Morgan said: "Overall we have seen a continuation of recent trends, with a further weakening in the labour market.
"The latest monthly tax numbers show over 800,000 fewer employees on the payroll in November than in February, with new analysis finding that over a third of this fall came from the hospitality sector.
"In the three months to October, employment was still falling sharply and unemployment was rising, but the number of people neither working nor looking for work was little changed. Average hours per worker were continuing to recover, though this was before the second lockdown in England.
"While there was another record rise in redundancies in the latest three months as a whole, they began to ease during October."
Ruth Gregory, senior UK economist at Capital Economics, said the rise in the unemployment rate suggests the previous phasing out of the furlough scheme continued to take a gradual toll, which will continue over the coming months.
"But with the rollout of vaccines set to boost demand in 2021, we now think that the jobless rate will peak at 7% rather than 9% and be back at 4% by 2023," she added.
Meanwhile, the EY Item Club said that should there be no trade deal between the UK and the EU, the unemployment rate could reach 8.5% rather than the 7.0% peak rate currently forecast.