UK unemployment soars to 17-year high

| October 12, 2011
”UK

The Office for National Statistics (ONS) has today revealed UK unemployment rose sharply in the three months to August – rising to a 17-year high.

The ONS said unemployment rose by 114,000 in the three month period to 2.57 million, taking the unemployment rate to 8.1% - higher than forecasts.

In comparison, unemployment in the US stands at 9.1%, Japan’s unemployment rate is 4.3%, while in the euro zone, it is 9.9%.

Youth unemployment also grew – to a record high of 991,000, while the number of jobless 16 to 17 year-olds rose by 3,000 to 205,000.

Meanwhile, the number of Britons claiming jobseeker’s allowance (JSA) rose for the seventh consecutive month in September, by 17,500, to 1.6 million.

The latest figures will put the Government under some pressure to explain what action it is taking to combat rising unemployment.

According to Employment Secretary, Chris Grayling, the UK is now seeing was “the impact of the international financial crisis”.

Average earnings, meanwhile, rose by 2.8% in the year to August – down 0.1% on July’s figure.

Today’s figures continue to suggest that the labour market is coming under immense pressure from public spending cuts.

The spending cuts have been described as the biggest for decades; however, Chancellor George Osborne has deemed them necessary in order to bring the budget deficit down.

Some experts have even suggested they could push the economy back into recession.

Earlier this week, the Chartered Institute of Personnel and Development (CIPD) said more public sector job losses are being axed than originally forecast.

The employers group said 610,000 jobs in the sector will be lost between 2010/11 and 2015/16 – one third more than the 410,000 the Office for Budget Responsibility (OBR) originally predicted.

The group is therefore calling on the Government to “announce a temporary halt to further cuts as part of any broader plan to stimulate economic growth and combat rising unemployment.”

There has been a series of poor economic news this week; the British Chambers of Commerce (BCC) yesterday said the fresh round of quantitative easing (QE) announced by the Bank of England last week may not be enough to prevent the economy from slipping back into recession and “more radical measures” are required.

The ONS yesterday revealed UK factory output fell 0.3% in August on a monthly basis.

The reading was worse than economists had expected and confirm weak prospects for the economy after the figures suggest a poor start to the third quarter.

Furthermore, the British Retail Consortium (BRC) said retail sales saw a slight improvement in September but overall prospects remain weak.

Finally, the Royal Institution of Chartered Surveyors (Rics) today reported that the UK housing market is suffering due to fears over the economy.

The Rics report said 23% of surveyors reported house prices fell rather than rose – unchanged from August’s figure.

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