UK unemployment hits 2.49m as enterprise zones announced

Jobless total jumps by 38,000, as the government reveals its latest plan to kick-start growth.

by Elizabeth Anderson
Last Updated: 06 Nov 2012
Following weeks of economic uncertainty across the eurozone and in the US, all eyes could now turn to Britain. Unemployment jumped by 38,000 in the three months to June, bringing even more fear that the UK economic recovery is slowing.  Meanwhile the government has announced the new locations of its ‘enterprise zones,’ previously touted as ‘trailblazers’ for prosperity. Not a moment too soon, by the sounds of it.

Britain’s unemployment rate now stands at 7.9% or 2.49m – a rise of 38,000 in the three months to June.  This means the unemployment total is now at its highest level since February 2010, according to the Office for National Statistics. The number claiming out of work benefits also surged by 37,100 last month – the biggest jump since May 2009.

The data came as a surprise to many in the City.  Analysts had predicted that unemployment would fall by about 10,000 over the quarter.  This optimism was partly based on the fact that unemployment dropped by 26,000 in the three months to May, and that the labour market had weathered the worst of the financial crisis reasonably well.    

There are now fears that Britain’s sluggish economic recovery could be close to grinding to a halt.  Earlier this month it was revealed that Britain’s economy grew by just 0.2% in the second quarter of the year, bringing a strong foreboding for the jobs market.  Firms are less likely to hire new workers if growth is weak, particularly in the private sector.  The coalition is depending on private companies to offset some of the job losses in the public sector as the austerity programme takes hold.  

Which makes the new enterprise zones, the government’s latest plan to kick-start the UK economy, all the more crucial.  Today marks the launch of the government’s second wave of enterprise zones - areas which are designed to attract people to starting a business.  Benefitting from ‘£150m in tax breaks over four years and new superfast broadband,’ Chancellor George Osborne said the sites would be ‘trailblazers’ for prosperity throughout the country.  When the first zones were announced, there were questions over some of the placements (Greater Manchester’s was based at Manchester Airport). But this time round the locations seem more promising.

The government also predicted the zones would create more than 30,000 new jobs by 2015.  But as unemployment has risen by more than that in three months alone, the PM is bound to face doubt over the government’s tough austerity programme and more questions about whether enough is being done to boost growth in the UK.

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