This is a report by Volterra for London Councils looking at unemployment in London.
It seeks to answer the question “what will unemployment in London look like in the future and how will this differ among different sub groups of London residents?”
Forecasts for two time periods - to April 2021 and to September 2022 - are produced. There are three underlying scenarios - a worst case, core and best case. The underlying assumptions vary including: extent of recession (GDP/unemployment growth), speed to peak, what happens after furlough ends, and speed of recovery.
The forecasts are disaggregated by geography (SRP and boroughs) and demographic characteristics (age, disability, gender, qualifications, ethnicity), as data allows.
In previous recessions it has taken a long time for unemployment to peak, and then recover back to pre-recession levels. In the 2008/09 recession, whilst the economic recession had finished by mid 2009, unemployment continued to rise for 14 quarters, stabilised for around a year (a quarterly peak of approximately 10.5% in London at the end of 2011), and then took a further 14 quarters to return to pre recession levels. London’s unemployment had not recovered fully until 2015 seven years after the recession.
This work considers what unemployment will look like across London’s residents as a result of the COVID-19 pandemic. The UK entered an economic downturn in 2020 as a result of the enforced reductions in economic activity resulting from the constraints placed on the whole of society as a result of the pandemic.
Historically there has always been a differential in London’s unemployment rates relative to national levels - London’s rate is 1-2 percentage points higher. This had narrowed over the past 5 years, but the rise in unemployment as a result of the current situation has resulted in this gap re-emerging - as of Oct-Dec 2020 the UK LFS unemployment rate was 5.2% and London’s was 7.1%.
The vast majority of economic forecasters predict that this recession will be short and sharp followed by a similarly short and sharp recovery. The OBR forecast that England’s unemployment will peak at 6.5% in Q4 2021.
This report's core scenario forecasts London’s unemployment peaking at 9.4% (464,000 people) in December 2021.
Read the full forecasting of London's unemployment and its dissagregation among subgroups of residents in the attached file.