London’s unemployment total is expected to peak at 9.4% – or 464,000 economically active residents – by the end of this year, according to new forecasting commissioned by London Councils.
The research suggests a rising tide of unemployment due to Covid-19’s impact and the end of the furlough scheme in September. While an unemployment peak of 9.4% of economically active Londoners by December 2021 represents the ‘core scenario’, the analysis also found a ‘worst case’ scenario of unemployment hitting 11.8% by February 2022 if the economic recovery is more sluggish than anticipated.
Boroughs say the data predicts Covid-19 leaving a “painful legacy” of job losses in the capital and are calling for an “urgent reset” of the government’s approach to unemployment support.
The report – produced by the Volterra Partners economic consultancy on behalf of the cross-party group London Councils – looks at the pandemic’s current and future impact on unemployment among Londoners and across different parts of the capital .
Key findings include:
- London’s unemployment rate has historically been higher than national levels. Although this had narrowed over the past five years, the Covid-19 crisis has increased the gap again. As of December 2020 (the latest available figures), the UK employment rate was 5.2% and London’s was 7.1% .
- Central London  will experience the largest rise in unemployment. Unemployment in these boroughs is set to reach 169,000.
- East London boroughs  will have persistently higher unemployment (peaking at 9.6%) for the longest period.
- With a peak rate of 10.4%, west London  will have the highest unemployment due to the dominance of sectors especially affected by Covid-19 restrictions. This is demonstrated by the furlough rates in this part of the capital and reflects the importance of Heathrow airport in the sub-region.
- Londoners from ethnic minorities will experience higher unemployment than white Londoners. For example, ethnic minority residents in central London are twice as likely to be unemployed (14.9% compared to 6.9%).
- The 16-24 age group is forecast to be hardest hit by job losses, making up around a third of unemployed Londoners.
- Londoners with fewer qualifications (i.e. those with only NVQ1 or NVQ2 levels) are set to experience more than three times the unemployment rate compared to those with more qualifications (NVQ4+). The industries with the highest numbers of furloughed workers – such as retail and accommodation and food – also have the highest proportions of workers with no qualifications.
London Councils is pushing for a ‘local first’ approach to unemployment support so that boroughs are better equipped to respond to their communities’ needs.