Fears of recession ahead of the elimination of jobs sees increase in total unemployment up to 17 years
Evidence that a major slowdown in economic activity is hitting the UK job market emerged today as unemployment surged past 2.5million to a 17-year high.
The total number of jobless adults increased by a hefty 114,000 to 2.57million in June-to-August, official figures showed today, the worst figure since the autumn of 1994.
A jobless rate of 8.1% is the highest since 1996, the Office for National Statistics said.
The figures prompted the Prime Minister to admit that the Government had to do more to get the economy moving. Both sides of industry voiced concern about the state of the jobs market, while Labour leader Ed Miliband told David Cameron it was time to admit the Government’s plan ‘isn’t working’.
The Prime Minister told the Commons: ‘I accept we have got to do more to get our economy moving, to get jobs for our people, but we mustn’t abandon the plan that has given us record low interest rates.’
The spike in unemployment is evidence that the labour market is now feeling the recent breakdown in the UK’s economic recovery – which the National Institute of Economic and Social Research today said was the weakest of any ‘since the end of the First World War’.
Lacklustre manufacturing growth, a contraction in the key services sector and a bloodbath on the stock market all suggest the UK is close to a double-dip recession.“
Nida Ali, economic advisor to the Ernst & Young ITEM Club, called the extent of job losses ‘alarming’.
‘The public sector is clearly on a massive purge,’ she said, ‘and the current environment of weak growth and a very uncertain outlook implies that private sector companies are being forced to delay recruitment or worse.’
Worryingly, the joblessness increase was due to a slump in employment – as opposed to more people entering the labour market – with the number of jobs plunging by 178,000 in the same period, the biggest fall in more than two years.
That included the largest-ever cut in the number of part-time workers, at 175,000.
Alan Clarke at Scotia capital said the figures were ‘a disaster’.
‘That (the data) shouldn’t come as a surprise because the economy is growing at half the pace it needs to keep unemployment stable,’ he said.
‘That’s not going to change anytime soon, so we should get used to numbers like this.’
The claimant count, covering those on jobseeker’s allowance, increased by 17,500 in September to 1.6 million, the seventh consecutive monthly rise and the highest total since the beginning of last year.
Around 150,000 people were made redundant in the latest three months, an increase of 6,000 over the previous quarter.
Youth unemployment reached a record high of 991,000, and other figures showed that the number of people classed as economically inactive increased by 26,000 to 9.35 million, a rate of 23.3%.
Taking the inactivity rate and the new jobless figures together, half of 16 to 24-year-olds are now not employed, it was revealed.
Average earnings increased by 2.8% in the year to August, down by 0.1 percentage points over the previous month, giving an average wage of £463 a week.
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