Unemployment Growth Hits 16 Year High

Recent reports show that unemployment is increasing at an astonishing rate. Unemployment growth is at a 16 year high as the number of unemployed persons claiming benefits increased by 20,100 in last month’s results. These are outpaced only by the numbers shown in the 1992 recession. The overall totals are bleak too, as new accounts show that June's figures were underreported. The corrected results amount to an increase of 70,000 since February.

Overall it appears that Britain could be in for a rough future. The Governor of the Bank of England, Mervyn King, admitted that an official recession is possible. It would effectively be a case of "stagflation" as economic growth stalls while the cost for food and fuel continue to rise.

The actual details of the increases aren’t too surprising. People under the age of 25 accounted for 25,000 from the 60,000 in the increase over the second quarter. The increase this last month was fairly spread out with the largest rise only consisting of 3,200 focused around London and the South East.

All this will certainly not help the current economic issues facing Britain. The credit crunch combined with inflation among necessities like food and energy only makes the unemployment situation more serious. With these numbers in mind, The Bank only predicted a 1.5% economic growth which would decrease to a dismal 0.75% growth next year.

The only good news from the Bank is that interest rates will not be raised. Rumors had been rampant that increases would be necessary to counter inflation. The Bank actually hinted of a possible rate cut near the end of the fourth quarter. Inflation should also be under control soon according to their analysis. The 5% peak predicted for the following months will decline quickly and be back below the Bank’s 2% target within 2 years. This isn’t a certainty, but it appears that we will ride through this crisis.

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