UK unemployment to exceed 3 million mark

According to the Ernst & Young Item Club, unemployment in the UK is to rise to 3.4 million in 2011.

The prediction comes from Ernst & Young’s quarterly report on the UK economy and is also forecasting that Gross Domestic Product will shrink by 2.7% this year, the sharpest contraction in over 60 years.

Last October, the official unemployment total reached a decade-high of 1.86 million with some reports predicting that the figure will hit 2 million when new figures are released later this week.

Furthermore, official figures on Friday are set to confirm if the UK is in recession. A country is considered to be in recession when it experiences two consecutive quarters of negative output.

Meanwhile, the organisation expect interest rates to stay close to zero but this will do little to benefit the housing market as a result of a lack of mortgage finance.

In related news, the Government is set to announce a further bailout package today in an attempt to kick-start lending.

Several measures including a bank insurance scheme to cover banks against future bad loans is a possibility.

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