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Unemployment in Britain is rising at its fastest rate in almost two decades, and could climb as high as three million by 2010. The Office for National Statistics (ONS) reported yesterday that a further 75,700 Britons found themselves on Jobseeker's Allowance last month, the steepest rise since 1991.
Many economists predict that the growing toll of redundancies - with about 30,000 set to go at Woolworths - could push that figure over 100,000 each month, as the recession takes an unrelenting grip on the economy.
The jobseekers "claimant count" crested the one million mark last month for the first time since July 2000. At 1.07 million, it is up 257,000 on the same period last year. The unemployment total, on the internationally agreed definition, now stands at 1.864 million, or 6 per cent of the workforce, its highest since 1997. The increase of 137,000 in the three months to October is the 10th successive rise.
The worry must be that the rise in unemployment and the fear of more lay-offs has fatally damaged confidence, and that the authorities' attempts to revive the economy through tax cuts, public spending and reductions in interest rates may have little effect.
Economists were uniformly horrified by the ONS numbers. David Blanchflower, a member of the Bank of England's Monetary Policy Committee, forecast that the jobless toll would "probably" exceed three million, and asked: "Where is the light at the end of the tunnel? I can't see any."
Howard Archer, of Global Insight, said it was "just a horrific set of data".
Vicky Redwood, of Capital Economics, judged that joblessness is rising "at a terrifying speed". The pound fell to another all-time low against the euro on news of renewed weakness in the economy. It stood at 1.08 ($2.63) last night. The Bank of England is expected to follow the example of the US Federal Reserve and cut interest rates to close to zero during January and February.
There is little comfort or joy in the labour market: employment slumped by 115,000 in the three months to October; job vacancies were down by 118,000 in November; and the number of people made redundant soared to 180,000. There is normally a "lagging indicator" as firms hang on to staff until they feel that shedding jobs is unavoidable, so the precipitate rise in unemployment confirms other evidence that the economy has "fallen off a cliff" in recent weeks.
The December survey of the Bank of England's network of regional agents, published yesterday, says "demand for labour had contracted further" and that "the majority of contacts were looking to reduce head count over the next few months".
The Bank's agents and the director general of the CBI, Richard Lambert, warned once again of the drought of bank lending. Lambert said "credit flows, on which companies depend for day-to-day business, remain severely constrained". The CBI's latest survey of shop sales also showed steep falls.
The unemployment burden is unevenly spread. The northeast endures the highest rate of joblessness and the highest percentage-point increase; but unemployment fell in the East Midlands and East Anglia.
- INDEPENDENT
