UNEMPLOYMENT in the UK could TREBLE this year hitting 3million and GDP could fall by 14.3 per cent, the Office for Budget Responsibility (OBR)has predicted.
The research released today shows the worst-case scenario following the impact of the coronavirus crisis on the economy.
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In its latest financial report, the OBR said that the UK economy is on track for the "largest decline in annual GDP for 300 years".
Even in its most optimistic projection, output is set to fall by 10.6 per cent this year.
In the most damaging outcome, it wouldn't see GDP recover to pre-crisis levels until the third quarter of 2024.
It comes on the same day that the Office for National Statistics (ONS) reported that the economy grew by 1.8 per cent in May but warned it hadn't recovered from record falls in March and April.
In the worst-case, unemployment could rise from 1.3million in 2019 to 3.1million at the end of 2020, peaking at 13 per cent in the fourth quarter of the year.
It will continue to rise to 4million in 2021 before falling to 2.8million by 2022.
The research only looks at scenarios for the next four years, and in the worst-case unemployment still won't reach pre-Covid-19 levels by 2024, settling at 2.2million.
Even in the most promising scenario, unemployment will more than double to 2.7million this year.
So far, 600,000 Brits have already lost their jobs as a result of lockdown with the Office for National Statistics already reporting a 2 per cent fall in the number of paid employees since March 23.
The OBR said that the true number of job losses depends on what companies do when the furlough scheme ends in October.
As of June 28, there were 9.3million workers receiving 80 per cent of their wages from the government.
Employees face the first wave of redundancies ahead of changes to the Coronavirus Jobs Retention Scheme (CJRS) in August, which sees employers chip in to pay for National Insurance and pension contributions for furloughed staff.
From September, the government's contribution will fall to 70 per cent of wages up to a cap of £2,187.50 a month.
New claims for Universal Credit soared at the start of lockdown, with the Department for Work and Pensions processing 3.2million new applications.
The number of people applying for welfare because they are unemployed jumped by a million in April and another 529,000 in May.
The OBR partly blamed the continued rate of unemployment on the difficulty of finding work during lockdown combined with a sharp full in the number of vacancies.
But it added as lockdown eases, it expects a number of workers will be encouraged to start actively looking for jobs and to come off benefits.
The research group also pointed out that the scenarios are not official predictions and were made ahead of the Chancellor's mini-Budget last week.
More to follow…
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