15 Dec 2010

Unemployment rises to 2.5 million

Two-and-a-half million people are now unemployed while the number of young people out of work soars to one of its highest levels in another bad blow to Britain’s delicate economy, writes Faisal Islam.

Unemployment reaches 2.5million (Getty)

New figures out today show unemployment rose by 35,000 in the third quarter of the year – taking experts by surprise and raising the threat that Britain, like the United States, could be heading into a “jobless recovery”.

Almost one in five young people aged 16-24 are now out of work – while more than a million women are now jobless – the highest total for more than 20 years.

Around the country, the worse hit regions were Yorkshire, Northern Ireland and the North East – while the Midlands saw the single biggest rise in unemployment.

It’s all rather grim news for the Government in the run-up to Christmas – especially as City experts had expected a marginal fall in the figures, which would have held the unemployment rate steady at 7.7 per cent.

Another blow to the Britain's delicate recovery 
Today's rise in unemployment was another bad surprise for the British economy after yesterday's higher than expected inflation rate, writes Economics Editor Faisal Islam.

Britain is already entering a very delicate few months as austerity hits, VAT is hiked.

Yet even if the recovery bumps along today's figure raise the chances of it being a miserable jobless recovery. The Government's strategy rests on the private sector creating jobs to make up for the losses in the public sector. There's little evidence of that so far.

Read more from Faisal Islam on the Economics Blog

David Cameron was accused of complacency on jobs during Prime Minister’s Questions today.

Labour leader Ed Miliband said told the House of Commons the prime minister seemed to “paint himself as an innocent bystander in relation to the unemployment figures”.

Mr Cameron told the House unemployment figures were a concern, but promised that the Government’s Work Programme would be the biggest effort in 70 years to help the unemployed find jobs.

A lot of families face a miserable Christmas and bleak prospects for 2011. GMB union leader Paul Kenny

“Anyone who loses a job is a tragedy for that person, and we must do everything we can to help people into a job,” the Prime Minister said.

“Whilst part of the figures are disappointing… they are mixed, because we see the claimant count has come down in the unemployment figures.

“Also we are seeing an increase in the number of vacancies in our economy. Every day there are another 10,000 vacancies.”

Unions said three claimants were already chasing each job vacancy – and warned things would get far worse, thanks to Coalition plans to cut public sector jobs by a third of a million.

The GMB leader Paul Kenny said “The Government are ignoring the lessons of history, that it is not possible to deflate your way to growth and a balanced budget. A lot of families face a miserable Christmas and bleak prospects for 2011.”

Consumers are already facing a sqeeze on their income: yesterday figures showed consumer price inflation was now up to 3.3 per cent – well above the Government’s target of 2 per cent – and substantially below the 2.2 per cent increase in pay compared to a year ago.

And in January VAT will go up to 20 per cent, hitting shoppers and small business owners.

Graeme Leach, of the Insitute of Directors, said the figures did not fill them with confidence about the pace of economic recovery – and predicted it would weaken still further in 2011.

Labour’s Douglas Alexander branded it “the real cost of George Osborne’s economic experiment”.

The Employment Minister Chris Grayling admitted there was “a difficult challenge” ahead – and a “long road towards restoring sustainable economic strength”.

With vacancies few on the ground – and yet more job cuts to come – it’s not looking like a very happy new year for millions of families.