The name U2 seems to be a rather poor fit with a band known for its pacifism. A U2 was an American spy plane, used during the 1950s, and early 60s. One possible suggestion for the band’s name was that a U2 plane crashed four days prior to Bono's, the band’s lead singer, birth.
The name U2 is also a play on words, suggesting, “you too,” or “you two,” which may be part of its origin. At the time the band formed, other groups were also experimenting with similar names. INXS could be loosely thought of as "in excess," and XTC easily translates to "ecstasy." Other bands followed in U2’s wake with names like UB40, which is an unemployment form in England.
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There is also another possible origin for the band’s name, which is the most likely explanation. A U2 is a form used in Ireland to claim unemployment. Since the band's early albums in particular focused on poverty, and especially the unrest in Northern Ireland, this reference to the form may have held the most significance. Also, since poverty was endemic in parts of Ireland at the time the band was formed, a play on words in terms of people filing the form is likely. “I’m filling out a U2. Oh, you too?”
Prior to taking the name, the band operated under two other names, Feedback and The Hype. It was the name U2 that stuck however, and it was under that name that the band recorded their first album Boy in 1980.
Some claim the band made up a list of ten names and voted with U2 coming out the favorite. Lead singer Bono is quoted as saying he never cared for the name, and never associated with the verbal play on words. He has made no comment regarding the unemployment form.