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UK unemployment falls back to 5%

Workers under 25 account for 63.1% of jobs lost since February 2020

The UK unemployment rate stood at 5% for the three month period to February, 0.1% higher than the quarter before, while lower than economists’ forecast of 5.2%.

As furlough measures remained in place and the vaccine roll-out gained further momentum, UK employment has begun to stabilise in the early part of 2021.

The number of employees on payrolls across the UK also increased in February, for the third month in a row, while remaining 700,000 below the figure from the previous year.

Workers under the age of 25 accounted for 63.1% of the jobs lost since February 2020, while more than half of the drop came from hospitality in London.

However, the number of young people in full-time education hit a record high of around 46%, “which shows that many are using the opportunity to upskill in preparation for the jobs market opening up”, according to Laith Khalaf, financial analyst at AJ Bell.

Khalaf provided further historical context for the UK unemployment figures announced today.

“Overall unemployment has been relatively benign so far in the crisis, thanks to the ton of government support that has been thrown at the labour market. Indeed 19% of the business workforce are currently on furlough according to the ONS.”

“It’s scant consolation to anyone who has lost their job as a result of the pandemic, but the unemployment rate today is no worse than it was in 2015, despite large parts of the economy being shuttered for much of the last year.”

The OBR reckons unemployment will rise to a peak of 6.5% towards the end of 2021, which compares with a rate of over 8% during the financial crisis.

“That’s still hundreds of thousands of jobs which are expected to be lost,” said Khalaf.

“However, economists’ forecasts are usually confounded by reality and given the unique and dynamic nature of the current economic crisis, it’s best to record any predictions with a light pencil rather than a marker pen.”

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