This is a much deeper recession than 2009 – but we can expect a quicker recovery

The rise in UK unemployment to 4.5 per cent is a taste of things to come but look closely and there are reasons for optimism, says Hamish McRae

The expected speedy recovery from recession should see job rises (Getty)

The chill winter has begun. The rise in UK unemployment to 4.5 per cent is a taste of things to come. The new partial lockdowns will inevitably cost some jobs that might otherwise have been created, so the questions are about the scale of the blow and the timing and pace of the recovery.

Scale first. Unemployment always gives a rear-view mirror perspective on what is happening to the economy, a lagging indicator of overall demand for goods, services and the people who create them. So the best feeling for what will happen to unemployment comes from what we know, or can reasonably guess, about the size of the economic blow during the spring and summer.

We know that the economy declined by around 20 per cent from peak to trough during the first half of the year. The official figures put the loss a bit greater, but they are always revised, so let’s stick to a round number. We think that about two-thirds of that loss has been recovered by the end of the third quarter, but that’s less than two weeks ago, so we have to rely on real-time data to give us a feeling for that.