Britannia Radio

rom Times Online

May 12, 2010

UK unemployment hits highest since 1994

http://business.timesonline.co.uk/tol/business/economics/article7123801.ece

Robert Lindsay

The number of Britons out of work in the three months to March rose by 53,000 to 2.51 million — the highest number since 1994 when the last Conservative Government was in power, official data showed.

The Office for National Statistics (ONS) revealed that the number of people who claimed unemployment benefits fell by 27,100 in April after a revised fall of 32,700 in March. Analysts had forecast a decline of 20,000.

The number of people claiming unemployment benefits has dropped by 100,000 since peaking late last year, easing the pressure slightly on the public finances

But the bill for other benefits, such as incapacity benefit and social security, is set to continue rising as the number of “economically inactive” people — those who are not working but are unable to claim unemployment benefit because they are ill, studying or caring for family — increased again in the three months to March.

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The ONS said that the number of inactive people of working age increased by 88,000 over the quarter to reach a record high of 8.17 million. Almost half of this increase was because of the number of students not in the labour market, which increased by 43,000 on the quarter to reach 2.3 million.

As part of the coalition deal the Liberal Democrats have agreed to the Conservatives’ plan to cut £6 billion from the budget deficit this year, which is expected to involve massive job losses from the public sector.

Howard Archer, chief European and UK economist at IHS Global Insight, said: “It is premature to call the all-clear on the jobs front."

The numbers of Britons in work fell by 76,000 in the three months to March to 28.9 million, pushing the employment rate to a 13-year low of 72 per cent.

He said: “This indicates that the number of unemployed has been limited by people withdrawing from the labour market for the time being. Significant job cuts in the public sector are looming as part of the major squeeze that has to occur on government expenditure."