Unemployment to hit three million within a year as it rises at fastest rate for 17 years

Cuts: Unemployment rose by 164,000 in the three months up to August and could hit two million by Christmas as the credit crunch hits home

Unemployment could hit three million by the end of next year to levels not seen since John Major was in power as Britain battles recession, it was warned today.

The rate is already at its highest level for almost a decade after soaring more than 10 per cent in the past three months to 1.79million.

In its biggest rise since 1991, 164,000 people lost their jobs in June, July and August. Last month alone, more than 31,000 people signed up to claim the dole.

Vicky Redwood from Capital Economics believes this is just the tip of the iceberg and that unemployment could eventually hit three million as the slowdown deepens.

‘With the UK heading into recession, we expect this measure to rise by a total of 1.5 million to around three million or nine percent by the end of 2010,’ she said.

She also estimated the number of people on unemployment benefit would hit one million by the end of the year.

According to today’s official figures, it already stands at 939,000 after an extra 31,800 people starting claiming the dole in the past three months.

The unemployment rate rose 0.5 per cent over the quarter up to 5.7 per cent, its highest level since the spring of 2000.

Fellow experts are in no doubt there are even harsher times ahead. ‘The worst is yet to come,’ said John Philpott, chief economist at the Chartered Institute of Personnel and Development.

‘Our current expectation is that it will peak at something over 2.25m, which is about 500,000 up. But there is so much uncertainty about the economy, it could be worse.’

Today’s figures show employment levels across Britain have slumped, down 122,000 in the past quarter to 29.4million – the biggest three-monthly fall since 1993.

On top of the losses to date, it has emerged almost 10,000 public-sector workers could be axed and frontline legal services slashed because of Government cut backs.

The Ministry of Justice was already planning savings but has now been told it must save £900million and is having to revise its shake-up, according to reports.

Another 12,000 job losses have been announced by the Department for Work and Pensions on top of 30,000 positions that were already due to vanish.

Man on a mission: Gordon Brown in Brussels today where he pledged the Government would do everything to help people stay in work or find jobs

In a further sign the economic slowdown is now hitting hard, more than 40,000 manufacturing jobs were axed, taking worker levels to a record low of 2.87million.

A total of 147,000 people were made redundant in the three months to August, up 28,000 on the previous three months.

The number classed as economically inactive has also risen – up 16,000 to 7.89million. This is more than 20 per cent of the working age population.

Meanwhile, the level of people out of work for more than a year increased by 35,000 to hit 440,000.

Unemployment among young people, aged 18 to 24, also rose by 56,000 in the three months to 559,000.

The grim data was compounded by the announcement 800 manufacturing jobs were being axed in Scotland by the U.S. computer chip firm Freescale Semiconductor.

TUC General Secretary Brendan Barber said today: ‘This is extremely bad news, and these figures do not even show the effects of the bank crash.

‘After years when we could take reasonably full employment for granted, we are now in for grim times. This is the next big challenge for Government.’

David Kearn, economic advisor to the British Chambers of Commerce, added: ‘Unemployment is rising and employment is falling at their fastest quarterly rates since the early 1990s. Unemployment will rise above the two million mark earlier than we expected.’

Gordon Brown, speaking at the EU summit in Brussels, promised the Government would do ‘everything’ to help create jobs and keep people in work.

‘Unemployment and redundancies are something we wish to avoid wherever possible and we will do everything in our power to help people to move in to jobs when vacancies exist, and to minimise the impact of unemployment,’ he said.

But the Tories work and pensions secretary, Chris Grayling, claimed the figures were a ‘clear indication of the real world consequences of Gordon Brown’s Age of Irresponsibility’.

‘Again and again he claimed that he had ended boom and bust. That looks pretty hollow now,’ he claimed.

The Government has already pledged to pay an extra £100million to retrain the thousands of workers axed as the economy continues to slowdown.

The move is another indication ministers are preparing for a recession.

Work and Pensions Secretary James Purnell said: ‘At a time like this we need to do everything in our power to help people who lose their job.

‘These are uncertain times and the clear message I want to send to people is that there is help out there if the worst happens and they find themselves unemployed.’

The Government said that the cash would be carefully targeted at – among others – workers in sectors ‘experiencing significant job losses’.

But Unions want a halt to cuts within the Government to stem the rising tide of job losses.

The TUC has also called for the Green paper on welfare reform, which includes plans to toughen the benefit regime, to be recalled.

Mr Barber said the policy was based on ‘blaming the victim’. ‘We have got used to record levels of employment, but the world has changed and we need new policies for jobless times,’ he said.

‘There can be no assumption that the people who are losing their jobs will find it easy to get new ones, and they will need all the help they can get with redundancy pay, retraining and personal advice.’

By Nicola Boden Last updated at 5:08 PM on 15th October 2008

Source: Daily Mail

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