UK economy latest

This page provides commentary and charts on the latest changes in the UK economy, using novel and rapid data sources as well as official statistics.

We explain the reasons behind each change as much as possible, although it can be difficult to separate the impacts of different things such as Brexit and COVID-19.

For an overview of our main economic indicators, visit our dashboard.

This page was last updated at 09:30 on 25 February 2021.

The proportion of businesses’ workforce on furlough leave increased to 20% in early February

25 February 2021

The proportion of businesses’ workforce on furlough leave increased from 11% in early December 2020 to 20% in early February 2021 (which equates to approximately 6.5 million people).

This remains lower than during the first national lockdown, when comparable estimates suggested that 30% of businesses’ workforce were on furlough leave in early June 2020 and unweighted estimates showed 31% on furlough in late April 2020.

For information, these figures from Business Insights and Conditions Survey (BICS), are not consistent with employment estimates from Labour Market Statistics as these are based on different sources over different time periods. Additionally, the BICS proportions do not include the public sector, financial sector and parts of agriculture.

Meanwhile, the percentage of businesses currently trading has remained stable since the start of 2021 when new coronavirus (COVID-19) restrictions were introduced, at 72% in mid-February 2021, similar to levels seen in early July 2020. This is compared with 84% of businesses currently trading in mid-December 2020.

The other service activities industry had the lowest percentage of businesses currently trading, at 19%. This was primarily due to the temporary closure of businesses in the hairdressing and other beauty treatments industry.

The accommodation and food service activities industry and the arts, entertainment and recreation industry were the other industries where 50% or less of its businesses were currently trading, at 38% and 50% respectively.

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There is a large increase in the unemployment rate, while the employment rate continues to fall

23 February 2021

Early estimates for January 2021 indicate that there were 28.3 million payrolled employees, a fall of 2.5% or 730,000 people, compared with the same period of the previous year. Compared with the previous month, the number of payrolled employees increased by 0.3% - equivalent to 83,000 people. Since February 2020, the number of payrolled employees has fallen by 726,000; however, the larger falls were seen at the start of the coronavirus (COVID-19) pandemic.

Data from our Labour Force Survey shows the unemployment rate continued to increase, while the employment rate continued to fall. Labour Force Survey (LFS) responses are weighted to official population projections. As the current projections are 2018-based they are based on demographic trends that pre-date the COVID-19 pandemic. Rates published from the LFS remain robust; however, levels and changes in levels should be used with caution.

In the three months to December, the unemployment rate continued to increase while the employment rate continued to fall

UK employment, unemployment and economic inactivity rates, seasonally adjusted, between October to December 2005 and October to December 2020

The number of job vacancies in November 2020 to January 2021 was 26% lower than a year ago. This is an improvement on the position in summer 2020 when vacancies were down by nearly 60% year on year, but the rate of improvement has slowed in the past few months. Further restrictions and national lockdowns recently have had an impact on vacancies in some industries more than others, most notably the accommodation and food services industry.

Although total hours worked continued to increase from the low levels in the previous quarter, this increase slowed in the latest quarter.

The number of people temporarily away from work has fallen since its peak in April and May 2020, although it has increased slightly in November and December. The number of people away from work because of the pandemic and receiving no pay has also fallen since the start of the pandemic but risen slightly over the last two months.

Annual growth in average employee pay continued to strengthen; the growth is driven in part by compositional effects of a fall in the number and proportion of lower-paid employee jobs, and by increased bonuses, which had been postponed earlier in the year.

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Employee growth has fallen more sharply in younger age groups

23 February 2021

Early estimates for January 2021 indicate that there were 28.3 million payrolled employees, a fall of 2.5% or 730,000 people, compared with the same period of the previous year.

In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020. Of the 726,000 decrease in payrolled employees between February 2020 and January 2021, 425,000 (58.5%) were younger than 25.

Since February 2020, annual employee growth has fallen to negative 33.2% for those aged under 18 years and negative 8.5% for those aged 18 to 24 years. These two groups have had the largest falls in employees in relative terms since the onset of the coronavirus (COVID-19) pandemic.

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Productivity estimates continue to be affected by furlough

23 February 2021

Labour productivity, measured by output per hour, fell by 1.1% in Quarter 4 (Oct to Dec) 2020 when compared with the same quarter a year ago. Over the same period, output per worker fell by 6.3%.

Furlough is affecting estimates, with people retaining their employment status as a worker but seeing a fall in hours worked.

The way that labour productivity is measured means that if total hours worked falls, but the number of workers does not fall, output per hour will increase but output per worker will not increase. This means that furlough can lead to an increase in output per hour growth but not an increase in output per worker growth.

Comparing with the year before removes any short-term fluctuations and shows the longer-term impact upon standards of living. When instead compared with Quarter 3 (July to Sept) 2020, output per hour decreased by 4.5%. The steeper fall quarter-on-quarter may reflect tighter coronavirus (COVID-19) restrictions in Quarter 4 compared with Quarter 3. Output per worker increased 1.4% from the quarter before.

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Redundancies have increased faster during the coronavirus pandemic than during the financial crisis of 2008 to 2009

19 February 2021

The rate of redundancies (redundancies per thousand employees) recorded in the UK since the beginning of the coronavirus (COVID-19) pandemic has already exceeded the highest rate reached during the 2008 to 2009 financial crisis. The pandemic and lockdown measures across the UK in 2020 caused businesses to close temporarily, which contributed to the aggregate redundancy rate increasing to a record high of 14.2 per thousand employees between July and November 2020, based on Labour Force Survey (LFS) data.

Some groups of people have been more affected by the redundancies than others. For example, the redundancy rate for men (15.5 per thousand) was higher than that for women (12.8 per thousand). Of employees recorded as disabled, as measured by the Government Statistical Service, in the period July to November 2020, 21.1 per thousand were made redundant, compared with 13.0 per thousand of employees who were not disabled.

With the closure of non-essential retail and hospitality alongside other restrictions to businesses, 71% of the redundancies in the period July to November 2020 were attributed by LFS respondents to employers cutting staff because of a loss of trade. The remaining proportion were equally attributed to either “employer closing down” or “other reasons”. Both coronavirus and EU exit-related uncertainties may have caused some employers to reduce staff.

Between July and November 2020, the industry with the highest redundancy rate was the administrative and support services industry (35.8 per thousand), followed by the “other services” industry group, which includes arts, entertainment and recreation (30.5 per thousand). As these services largely depend on face-to-face contact between people, the pandemic and associated lockdown measures significantly reduced the demand for workers.

Redundancy rates across most industries increased since the beginning of the coronavirus pandemic

Redundancy rates by industry, UK, per thousand employees, not seasonally adjusted, January to November 2020

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Retail sales dropped in January 2021, but not as low as during the first lockdown

19 February 2021

In January 2021, retail sales volumes decreased by 8.2% when compared with December 2020 as tighter nationwide coronavirus (COVID-19) restrictions affected sales. The amount spent also fell by 7.8%.

During January, widespread restrictions on non-essential retail were in place in England, Scotland and Wales, which feedback from retailers suggests had an effect on sales.

However, the impact of the January lockdown was not as large as that seen during the first full month of restrictions in April 2020. Retail sales volumes in January were 5.5% lower than pre-pandemic levels in February 2020. In April 2020, sales fell by 22.2% compared with February.

The proportion of shopping carried out online reached record levels in January, to 35.2% of all sales. This is an increase of 5.6 percentage points compared with December 2020, and an increase of 15.7 percentage points compared with January 2020.

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