Almost a third of the UK’s working population is now receiving state-support to pay their wages through the COVID-19 pandemic, new figures show.
Under the the government’s job retention scheme 8 million people have been furloughed, the Treasury said on Tuesday, at a cost of £11.1bn ($13.4bn) to the state. A further 2 million self-employed people have claimed government grants worth £6.1bn.
It means 10 million workers across the UK are depending on some form of government cash to pay their wages through the crisis. Figures from the Office for National Statistics, also released on Tuesday, show 33.1 million Brits are currently in work, highlighting the huge scale of the state intervention.
The ONS said on Tuesday that employment in the UK stood at a joint record high of 76.6% going into the pandemic. However, unemployment claims grew by 850,000 to 2.1 million in April.
The surge is likely to push the UK’s unemployment rate up from a record low 3.9% to around 9%.
While a huge leap, the figure compares favourably to the US where unemployment looks set to climb above 20% in May. The US has no form of wage support to try and keep employees in work.
However, fears are growing that the UK’s job retention scheme, which pays 80% of employee wages, will only delay a wave of redundancies rather than prevent them.
“Many firms will be unable to operate at full capacity for some time, and this means there's an increasing risk that businesses begin to make longer-lasting changes to their business models,” James Smith, a developed markets economist at bank ING, said on Tuesday.
“That, in turn, raises the risk of a second wave of redundancies depending on how and when the Job Retention Scheme is eventually phased out.”
Chancellor Rishi Sunak said in a statement: “Our plan to support businesses and individuals is one of the most comprehensive in the world.
“As these figures show, we are currently supporting millions of workers and businesses through these tough times so we can recover as quickly as possible.”
The Treasury figures show almost £22bn has now been lent to UK businesses under the government’s three main coronavirus business support schemes.