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Saturday 17th of July 2010
July 14, 2010    

CIPD warns of jobs deficit amid spending cuts

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by Kay Murchie

The Chartered Institute of Personnel and Development (CIPD) has warned of higher unemployment if economic growth misses forecasts.

According to the employment group, growth needs to be at least 2.5% between now and 2015, in order for the private sector to create sufficient jobs to offset those that would be lost as a result of massive Government spending cuts.

Last month, the Office of Budget Responsibility (OBR) forecast the UK economy will expand by 1.3% in 2010, before rising to 2.6% in 2011 and 2.8% in 2012 and 2013.

Commenting, John Philpott, chief economic adviser to the CIPD, said: “Against the massive public sector job downsizing, it doesn’t take anything like a double-dip recession to cause a serious prolonged jobs deficit, merely economic growth in the range of 2% to 2.5% a year rather than the 2.5% plus (above trend) annual growth rates the OBR expects and the government hopes for.”

He adds: “A slightly milder growth outcome - which many would consider a decent recovery in output given the various strong headwinds at present facing the economy - is easily as imaginable as the OBR forecast and would leave unemployment still close to 2.5 million by 2015.”

Official UK unemployment figures due to be published this morning.

Last month’s figures put the total unemployed to 2.47 million, with the jobless rate at 7.9%.

According to reports, the jobless rate is expected to remain at 7.9% for the three months ending May.

Meanwhile, the OBR is forecasting that the unemployment rate will peak at 8.1% - or around 2.5 million, in 2010.

However, the CIPD, was less optimistic and said unemployment will peak at 9.5% (2.95 million) in 2012 before falling to 8% by 2015.

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