The number of unemployed people in the UK has risen by 164,000 to reach 1.79 million, the biggest increase for 17 years, according to government figures.
The unemployment rate rose to 5.7 per cent between June and August, up from 5.2 per cent in the previous quarter, and the biggest increase since 1991, the figures from the Office for National Statistics revealed. The number of people claiming jobseeker’s allowance also rose by 31,800 in September to reach 939,900.
The statistics have prompted fears among economists that unemployment will reach two million by Christmas. CIPD chief economist John Philpott told the BBC’s Today programme: “We’ll see hundreds of thousands of jobs being lost, and unemployment is likely to rise, certainly above two million. The question is how much further than that.”
Growth in average earnings, both including and excluding bonuses, also decreased over the past quarter. And inflation has reached a 16-year high, according to official figures released yesterday.
“A real pay squeeze is adding to the jobs crunch,” Philpott said. “Pay rises have fallen back just as price inflation has surged. The combination of mounting job losses, heightened job insecurity and shrinking real incomes means people are hardly likely to be rushing out to spend – for the time being intensifying recessionary pressure in the economy.
“This adds weight to the case for further substantial cuts in interest rates even though the rate of inflation is well above the government’s target.”
The unemployment figures came alongside an announcement from the government that an extra £100 million is to be made available to help those who lose their jobs to retrain.
Employment minister Tony McNulty said: “The extra cash will help unemployed people and those facing redundancy to retrain and develop their skills so they can quickly move back into sustainable employment. The money will be carefully targeted – for example, on people from sectors experiencing significant job losses and on people who need support to move back into work.”