Sunday, October 9, 2011

UK: Unemployment levels to hit 17-year high

Levels of unemployment in the UK will this week surge to their highest for 17 years - as experts warn the figure will increase even further in the following 12 months. Economists believe Wednesday's figures from the Office for National Statistics will show the number of people out of work to have risen well beyond 2,518,000 - the peak seen earlier this year. And the total is almost certainly expected to top the 2,521,000 recorded at the end of 1994 when Britain was in the wake of its recession.

It has prompted even further fears of a double-dip recession, as 8 per cent of 16 to 64-year-olds will be out of work, and piled even more pressure on the coalition's much criticised economic strategy. Experts at Deutsche Bank have warned the figure could increase even further - to 8.8 per cent - in 2012.

Wednesday's figures may also reveal that youth unemployment, for people aged between 16 and 24, has passed one million for the first time since records began. 

The news will add pressure to the government to alter its cuts programme. Last week figures showed that the economy grew by 0.4 per cent and 0.1 per cent in the first and second quarters of this year, much lower than previously estimated. Inflation, meanwhile, is expected to hit 5 per cent in November. In a bid to deal with the problem, the Bank of England announced this week it will be pumping £75 billion into the economy to try and stimulate growth as part of its quantitative easing strategy.

Deutsche Bank economist George Buckley said: 'With growth so weak, it is hardly surprising unemployment is rising. 'A combination of anxiety over the eurozone debt crisis and the slowdown of the US economy is driving businesses to cut staff.'

Last month the economy was rocked after it was announced that the unemployment rate had seen its biggest rise for two years. It was driven by a surge in the number of jobless young people, with a report saying that two million new jobs must be created if Britain is to return to full employment.

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