Surge in Numbers Seeking Benefits Due to Job Losses and Falling Income

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The scale of the UK's economic crisis was laid bare on Tuesday after 857K more people applied for unemployment benefits in April, which makes for the largest spike in claims since records began in 1971.

The ONS reported an increase in the Claimant Count of 856.5K, which beats the consensus market estimate for an increase in 675.0K.

The Claimant Count increased to reach a total of 2.1 million, which represents a monthly increase of 69.1%.

The Claimant Count is a measure of claims for Jobseeker's Allowance and claimants of Universal Credit.

Importantly, not all those who applied for the these benefits are necessarily unemployed and we will therefore need to wait until next month before we get a more accurate picture of the unemployment situation.

This is because as part of the UK government's response to the coronavirus crisis, a number of enhancements were introduced to Universal Credit whereby more people became eligible for Universal Credit if their earnings fell below a certain income threshold.

Consequently, while some of any change in the Claimant Count would be because of changes in the number of people who are unemployed, a certain amount of the change will be because of changes in the number of employed people who are eligible for Universal Credit as part of the government response.

The ONS are not able to identify to what extent these two factors have affected the numbers.

Regardless, the data suggests a surge in unemployment will be reported in the June set of figures which will cover the April lockdown that effectively shuttered the economy.