Unemployment rate hits 4.5% as furlough unwinds

UK unemployment has surged to its highest level for more than three years as the coronavirus pandemic hits jobs, official figures revealed today.

An estimated 1.52 million people were unemployed in the three months to August, a jump of 138,000 on the previous quarter, according to the Office for National Statistics.

It means the rate of unemployment leapt to 4.5 per cent, compared to 4.1 per cent in the previous three months.

The number of UK workers on company payrolls plummeted by 673,000 between March and September, despite edging up by 20,000 last month.

It comes as Paul Johnson, director of the Institute of Fiscal Studies, warned that “widespread” tax rises would be needed to make up for the “vast amounts” of money the government was pumping into the economy.

He told BBC Radio 4’s Today programme: “Once we are eventually through this, we are going to have a smaller economy and more pressures on public spending and debt at historically high levels.

“That’s going to leave us with very little choice than over a protracted period of time to be looking at some really quite substantial tax rises.

“I’m talking about tax rises even the middle of this decade not in the next year or two. Not tax rises that are small or ones that can be paid just by big companies or just the rich. They are going to be pretty widespread because they are going to be two or three percent of national income.”

Asked if it could be a rise in VAT or the basic rate of income tax, he replied: “I think it’s that kind of thing if we are looking at the scale of change that we need.”

He added: “The economy is in a pretty dire state at the moment. We’ve lost more output last year to this than we did over the whole of the financial crisis.

“Unemployment – we are going to be lucky if we keep that below three million which will be its highest level since the early 1990s.”