Unemployment in the UK has been on the decline since early 2012, although the current coronavirus outbreak has only increased those figures, albeit slightly. Despite the government’s best efforts at supporting businesses and encouraging them to furlough their employees rather than lay them off, many people have found themselves unemployed. What kind of unemployment rates are we looking at in 2020 and what does it mean for the market?
Unemployment
ONS reports that job vacancies sank by 52,000 year on year to 795,000 for the first three months of 2020. The more concerning fact is that UK unemployment grew from 22,000 to 1.36m and that was before March’s coronavirus lockdown. The government’s pledge of dedicating funds to unemployment pay saw a record high increase of 76.6%. With the lockdown affecting millions of jobs in the UK and people’s ability for productivity and the time it will take for businesses to bounce back it is likely that unemployment will continue to increase even after lockdown is lifted.
How Is The Market Reacting?
You might think that laying a significant number of employees off says that a company is not doing so well, so why is the stock market remaining healthy? Many market experts have commented on the phenomenon and have expressed that the market estimated that unemployment rates would actually be much worse than they are. Those early rumours we were talking about in our earlier blog actually meant that the market prepared for worse than what happened, seeing a healthy rebound rather than an unhealthy plummet.
Does That Mean It’s A Good Time To Trade?
Most people have found themselves with more spare time and that seems to make it a great time to get into online trading and investing. Of course, the rise in unemployment rates and general uncertainty haven’t exactly left people with spare cash, so it’s important to honestly assess your financial situation before you approach the markets. If you do have a budget to play with, now could well be the time to learn more about trading and investing!
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Contact CFI
To learn more about investing in today’s global markets, contact CFI Financial today and speak with someone who can answer any questions that you might have.
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