Eddie Mair 4pm - 6pm
Coronavirus: 6.6 million people apply for benefits in US
2 April 2020, 16:14
A record 6.6 million Americans applied for unemployment benefits last week as job losses rose sharply due to the coronavirus pandemic.
A report issued today by the US Labour Department showed that job cuts are mounting against the backdrop of economies around the world sinking into a severe recession.
The figure for last week is much higher than the previous record of 3.3 million reported for the previous week.
It comes as it was revealed that nearly 1million Britons have applied for Universal Credit in the past two weeks - which is almost 10 times as much as normal.
The surging lay-offs have led many economists to envision as many as 20 million lost jobs in the US by the end of April.
The unemployment rate could spike to as high as 15 per cent this month, above the previous record of 10.8 per cent set during a deep recession in 1982.
Many employers are slashing their payrolls to try to stay afloat because their revenue has collapsed, especially at restaurants, hotels, gyms, movie cinemas and other venues that depend on face-to-face interaction. Care sales have sunk and factories have closed.
Stay-at-home orders, imposed by most US states, have intensified pressure on businesses, most of which face rent, loans and other bills that must be paid.
Congress significantly expanded the unemployment benefits system in last week's 2.2 trillion dollar economic rescue package.
That legislation added 600 dollars a week in jobless aid, on top of what recipients receive from their states. This will enable many lower-income workers to manage their expenses and even increase their purchasing power and support the economy.
Whole swathes of the British economy has also been brought to a standstill by the pandemic with thousands of recorded job losses. Many people have been put onto government furlough schemes to offset larger unemployment figures.
Philip Hampton, former chairman of Royal Bank of Scotland Group Plc said: "There’s going to be government money going into all sorts of places that would have been unthinkable just weeks ago."
Also across Europe, where most countries are in lockdown, shockwaves have caused record surges in job losses.
Spain had a record number in jobless claims in March as did Austria which recorded the highest unemployment rate since the Second World War.
Peter Chatwell, head of fixed income strategy at Mizuho International Plc said: "There is major trouble for the real economy.
“The data are really only showing a part of that for the moment.”
UK data for March isn't out yet but a statistics office survey shows 27 per cent of businesses are reducing staff levels in the short term, Bloomberg reports.
Also a study by Oxford University shows almost half of British workers will struggle to pay bills in the coming months.