Overall UK unemployment grew to 4.1% over the quarter (from 3.9%) as companies continued to remove staff from payrolls as they prepared for the end of the government furlough scheme.

Quilter have cautioned that job losses are likely to rocket much further than their current levels and Financial Planners must be prepared for a long hard economic road ahead.

The UK region with the highest unemployment rate estimate for the quarter was the North East at 5.2%, followed by London at 5%.

The largest increase in the unemployment rate since the last quarter was in the South West with a rise of 0.8%, followed by the East Midlands at 0.7%.

Only the North West and the West Midlands saw a decrease in the unemployment rate.

According to the ONS figures, 695,000 additional people have become unemployed in the UK since lockdown began in March.

The economic situation for 2020 may look dire, but leading economists have said whilst they expect UK Gross Domestic Product to decline by a record -8.6% this year, they also expect it to bounce back strongly in 2021 with a rise of 6.2% predicted next year.

Paul Craig, portfolio manager at Quilter Investors said: “After a sunny summer month spent dining out, it is important to remember we are only at the beginning of a very difficult road ahead.

“And while real time indicators show a relatively modest shedding of jobs in August, with 36,000 fewer payroll employees compared with the same period in 2019, the figures will mask the full extent of the economic damage caused by Covid-19.

“The number of redundancies has been relatively muted up to now given that many job-losses have been put on ice while the government’s furlough scheme remains in play.

“What we do know, however, is that in aggregate, businesses are in cutting mode and remain pessimistic about the near-term economic outlook. Forward hiring intentions remain in the doldrums and vacancy rates are nearly half the level they were this time last year."

Robert Alster, CIO at investment management firm Close Brothers Asset Management, said that the unemployment figures are just beginning to reflect the reality of the state of the UK economy, and Financial Planners need to be prepared for a tough Q4.

He said: “The UK's employment data is beginning to reflect the realities of a post-Covid economic landscape. Recent jobs drives by the likes of Amazon and Tesco have offered rays of light, but The Institute of Employment Studies (IES) estimates that planned redundancies for this autumn are likely to be more than twice the height of the last recession. Self-employed workers, 18-24s, and those in the still struggling retail and hospitality sectors are of particular concern, and must be front of the Chancellor’s mind when he looks to set out the next part of his support and recovery strategy.

“Crunch time will come in the next twelve weeks, as lockdown restrictions are tightened and the furlough scheme comes to an end. And as the Brexit process ramps up, the scale of the economic challenge facing the UK remains in the balance. Despite the relative success of the Government’s policies so far, a stormy Q4 could blow the recovery onto the rocks.”