UK may need bigger safety net for jobless after lockdown - IMF

LONDON (Reuters) - Britain should consider increasing its unemployment benefits to help get people into the kind of work that is likely to be in demand after the coronavirus lockdown, the chief economist of the International Monetary Fund said.

Gita Gopinath told lawmakers in Britain's parliament on Wednesday that the first priority for governments was to scale back gradually their support programmes for workers affected by the COVID-19 crisis, including state job retention schemes.

Then, as governments seek to get people back to work, the focus should be on reallocating resources in the labour market, or moving people into jobs where demand will be strong, which would initially increase reliance on unemployment support.

"In case of the UK, you could make a case for temporarily increasing the support under that because the UK has one of the lower replacement rates among advanced economies in terms of unemployment insurance," Gopinath said.

Britain's job retention scheme currently covers more than 9 million jobs - equivalent to around one in three private sector employees - and it is due to expire at the end of October.

Prime Minister Boris Johnson has said Britain is very likely to need a bigger employment support programme.

Finance minister Rishi Sunak is due to spell out the government's next moves to support the economy on July 8.

(Writing by William Schomberg, editing by Andy Bruce)