The Office for National Statistics said today that unemployment jumped another 177,000 to 2.1m between December and February, the highest level since Labour came to power. To add to the Government’s misery, it also revealed that public borrowing ballooned to a record £90bn in the last financial year – nearly three times as much as the previous year, and way ahead of the Treasury’s forecast of £78bn. In fact, the Treasury’s only consolation is that at least some of the IMF’s bean-counters appear to be (even?) more incompetent than they are.
The figures show that the jobless count saw its biggest jump since 1991 last quarter, taking the unemployment rate to 6.7% - while the number of vacancies plummeted again and pay growth ground to a halt as bonuses dried up. The only glimmer of hope was that the number of people claiming unemployment benefit in March ‘only’ rose by 73,700 (to 1.46m) – less than economists expected, and much less than the 136,600 jump in February. But most still expect the wider count to pass 3m before long, and that’s going to cost money: more than £250 a second, in fact, according to the TUC’s Brendan Barber.
With spending on the rise and tax revenues shrinking, today’s hair-raising borrowing figure is unlikely to improve any time soon. Our net debt already stands at £744bn, the ONS said today, while the £19bn we borrowed in March is the highest monthly figure since records began. No wonder Darling is has announced that borrowing will be almost double that figure next year. (Though given he was expecting this year’s total to be £78bn, let’s hope his numbers are a bit more reliable this time.)
Speaking of dodgy forecasts, the IMF has been forced into a fairly humiliating climb-down over the Government’s predicted losses from the UK banking sector. Yesterday, it claimed Britain was facing another £200bn of write-offs this year and next (as part of a mammoth £4trn worldwide) – but the Treasury clearly went postal about this, briefing furiously that the figure was wrong. The IMF later retracted their claim, revising the figure downwards to a ‘mere’ £130bn – although it didn’t bother with any kind of explanation. Perhaps one of their brainiacs forgot to carry a nought when they were doing their sums.
Either way, these figures are still way ahead of the Treasury’s £60bn estimate. The Treasury claims that it’s a question of interpretation – that the IMF is falsely assuming that every single pound lost by the banks will come out of Government funds. But perhaps the main lesson to take from this is that none of these economists really have any idea what will happen...
In today's bulletin:
Darling hikes top tax rate as Government borrowing soars
Unemployment and borrowing soars - but IMF backs down
Editor's blog: Hello, Darling, want a new motor?
Diageo champagne on ice as LVMH denies Moet sale
Quadruple your money - give it to a teenager