On the 23rd of March, the United Kingdom locked down in response to the COVID-19 pandemic. Subsequently, the UK economy suffered the biggest contraction of economic activity in 41 years, experiencing a 21.5% year-on-year drop in GDP. The labour market has seen record rises in unemployment claims, big drops in employment and self-employment, a rise in short-time work along with an unprecedented fall in hours worked and a big drop in vacancies. These effects have been most pronounced among young workers and have shown little recovery in the recent months. Although the government's job retention scheme for employees and income support scheme for the self-employed helped maintaining unemployment rates stable until the middle of Summer, an increase is clearly visible in the recent months. How to ensure affected individuals are not on a trajectory heading towards longterm unemployment remains the top priority for economic recovery.

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1 January 2021

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Published in IZA Research Report No. 105

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This report is published by IZA (Institute of Labor Economics)

IZA Covid-19 crisis response monitoring: United Kingdom

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This External report is part of the centre's Labour programme.