Chris Williamson, chief economist at Markit, agrees: ‘The rate at which the dole queue is lengthening eased towards the end of last year, but a further rise in unemployment looks highly likely, perhaps breaching the three million mark later this year. Public sector staff cuts will be accompanied by private sector job losses, as companies focus on cost-cutting in the face of what many are expecting to be a challenging year ahead.’
The ONS’ data shows that, as of November last year, a sobering 8.4% of the UK population were out of work. And even those in employment didn’t have much to celebrate. Total pay (including bonuses) rose just 1.9% on the previous year: even with inflation falling, prices still outstrip earnings by miles.
But don’t up sticks and head for Hawaii just yet. It’s going to be tough wherever you are in the world. Justin Lin, the chief economist for the World Bank, has revised down his growth expectation for global GDP from 3.6% to just 2.5%.
Unfortunately for the eurozone, it is tabled to fare much worse, with a 0.3% contraction on the cards for 2012. Even Germany, the most robust economy in the zone, has been forced to revise its 2012 growth down from 1% to 0.7%.
And sluggish growth isn’t all we’ve got to worry about. ‘The risk of a global freezing-up of the markets and as well as a global crisis similar to what happened in September 2008 are real,’ warns Lin. ‘And the downturn in Europe and weaker growth in developing countries raises the risk that the two developments reinforce one another.’
The pressure is now on governments to shore up resources and prepare for the worst. In Britain, this morning’s unemployment data, coupled with these gloomy predictions, will prompt much hand-wringing in Whitehall. Expect more quantitative easing very soon...