James Smith, a Developed Market economist at ING, believes that green shoots in the UK's jobs market suggest the forthcoming peak in unemployment may not be as high as first feared.

"The latest UK employment data provides further signs that the jobs market has begun to turn a bit of a corner since the turn of the year. Despite the recent lockdown, the unemployment rate slipped to 4.8% in the three months to March. And actually, if we look at more timely weekly data, the rate averaged 4.6% in the last six weeks of the first quarter – going briefly as low as 3.9%."

"While the furlough scheme has succeeded in stemming the tide of redundancies we saw in the hard-hit sectors last autumn, we’re seeing some tentative improvement elsewhere. Admin and support roles, for instance, have seen a strong rebound according to payroll data."

"Having said that, there is little doubt that we will see a rise in the jobless rate when the furlough scheme ends in September, though the peak is likely to be significantly lower than feared a few months ago. Barring a return to tighter Covid-19 restrictions, the fact that the job support is being offered until well after the April/May reopening phases should give firms enough time to rebuild their finances to be able to return most, if not all, of their staff from furlough. Where jobs are lost, it’s likely to be largely where roles no longer exist, for example, because of structural change created by the pandemic."

"We expect the jobless rate to peak at around 6% in the autumn, though we think things are likely to be improving again by year-end."