The latest official unemployment figures are out, and they’re even worse than expected: the jobless count jumped by 220,000 to a 14-year high of 2.44m between April and June, as more struggling companies were forced to cut jobs. The overall unemployment rate now stands at 7.8%, with young people being hit particularly hard. After a few relatively optimistic economic signs lately, this is an unwelcome reminder that there’s plenty of recessionary pain still to come…
The stats paint a pretty grim picture. Admittedly the total count was slightly lower than the 2.5m some economists were predicting, but it's still the highest since 1995 - and there’s no sign of the rate of increase slowing (so 2.5m is clearly only a matter of time). The youngest are bearing the brunt: the employment rate for 18-24 year-olds is just 60%, dropping to a gruesome 29% for 16-17 year olds. What's more, the consensus opinion is that unemployment will keep rising for at least another year, with another 1m people set to lose their jobs in the interim. (The suspicion is that a much higher proportion of these cuts will be in the public sector, which has so far largely escaped the worst).
One odd aspect of the figures is that the actual claimant count – i.e. the number of people picking up jobseekers’ allowance – is still lagging well behind the overall jobless count at 1.58m or 4.9% (the rise was lower than expected again last month). The Government has just launched an investigation into this discrepancy, which suggests that lots of those who have lost their jobs either can’t or won’t join the dole queues, preferring to rely on partners or redundancy cheques or savings instead. Although this saves the Government money, it might also highlight a problem with the rules or the provision of JSA – and could be leaving some bereft. The Government denies that jobcentres just can’t cope with the extra demand, but that’ll presumably be the investigation’s first port of call.
There was more bad news from the Bank of England today: in its latest inflation report, Governor Mervyn King admitted the recession 'appears deeper' than the Bank expected, while any recovery would be 'slow and protracted'. Warning that inflation is likely to remain below the Bank's 2% target until at least 2012, despite its unprecedented spending, Merv clearly thinks we're in for a tough few years.
In fact, you can't move for doom and gloom this morning. And in between trying to claim it would all have been much worse under the Tories (yawn), the Government seems intent on making it worse: the Audit Commission has released just about one of the most dispiriting reports we’ve ever seen from a public body, arguing that the recession is about to pass from its economic phase to a social phase, where rising unemployment and poverty fuels a big surge in drug addiction, housing problems and domestic violence – just as local authorities are being deprived of the resources to cope with it. Unless you’re an opposition politician who likes harping on about Broken Britain, this is pretty depressing stuff. Of course it’s probably true to some extent – these things are inevitably linked to the economic cycle – but this kind of tabloid-friendly nightmare-ish vision will only encourage the doom-mongers.
And optimism is certainly needed if the recovery is going to happen – however little today's figures seem to justify it.
In today's bulletin:
Unemployment soars again on the Inglorious Twelfth
JLR and MG Rover - a tale of two car companies and one cabinet minister
TUI profits as holidaymakers hunt for bargains
Summer security provides window of opportunity
If I Had to Start Again: Gerald Ronson of Heron International