UK unemployment total reaches 17-year high

Chris Grayling blamed the rise in unemployment on the financial crisis

UK unemployment rose by 114,000 between June and August to 2.57 million, a 17-year high, according to official figures.

The Office for National Statistics (ONS) said the unemployment rate also increased to 8.1%.

The jobless total for 16 to 24-year-olds hit a record high of 991,000 in the quarter, a jobless rate of 21.3%.

The number of people out of work and claiming benefits rose 17,500 to 1.6 million in September.

Other figures showed a record cut in the number of part-time workers, down by 175,000, and there was also a record reduction of 74,000 in the number of over-65s in employment.

The Employment Secretary, Chris Grayling, said that what the UK was now seeing was "the impact of the international financial crisis".

Speaking in the Commons at Prime Minister's questions, the leader of the opposition, Ed Miliband, said: "A year ago ... the prime minister justified his economic policy by saying unemployment would fall this year, next year and the year after. Isn't it time he admitted his plan isn't working?"

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There is little cheer in the latest official figures and they illustrate the human cost of the slowdown in economic growth”

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The Prime Minister, David Cameron, rejected the criticism and said he would stick to his plans to reduce the deficit of nearly 10%.

"These are very disappointing figures that have been announced today and every job that is lost is a tragedy for that person and for their family and that is why this government is going to do everything it possibly can to help get people into work."

Confidence

The Bank of England recently said it would pump another £75bn into the economy through more quantitative easing (QE) to try to improve the business climate.

The Bank's chief economist, Spencer Dale, has warned the UK is suffering one of its worst ever periods of financial turmoil.

He told the Reuters news agency that the economy was likely to get steadily weaker throughout the rest of this year.

But Mr Grayling said the "important reason why we are pursuing deficit reduction" was to retain the confidence of commercial markets, and to encourage businesses to set up in the UK.

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The forces acting to pull employment back to earth are starting to win out”

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He also said that the latest available figures showed that over the past year, more jobs had been created in the private sector than had been lost in the public sector.

'Grim figures'

The TUC's general secretary, Brendan Barber, called the latest set of unemployment figures "terrible".

"The government's austerity measures have turned unemployment into a full-blown crisis - with job losses not seen since the darkest days of the recession," Mr Barber said.

"Worryingly, this is not simply the result of eurozone troubles. This unemployment crisis is state-sponsored and areas like the North East are paying a heavy price, with over one in 10 people out of work."

The data drew a mixed reaction from economists.

Shadow secretary for work and pensions Liam Byrne: "The government's plan is hurting, but not working."

Ross Walker, from RBS Financial Markets, said the picture was not altogether gloomy.

"The drop in total employment is bigger than people thought. But it is worth noting that it is almost entirely part-time," he said.

"So in the latest quarter, full-time employment - which to me is always the single most important indicator - was down just 2,000 and it's still up over the past year by about 124,000."

But Alan Clarke, of Scotia Capital, said the figures were a "disaster".

He added: "That (the data) shouldn't come as a surprise because the economy is growing at half the pace it needs to keep unemployment stable. That's not going to change anytime soon, so we should get used to numbers like this."

The chief economist at the Institute of Directors, Graeme Leach, said: "These are grim figures and are likely to get worse before they get better. But abandoning the deficit reduction plan will do the unemployed no favours.

"The hope is that QE2 will lift the money supply and economic activity, but the ongoing eurocrisis is pushing the UK towards a double-dip with increasing speed. All this is before the threat of contagion has actually materialised. We are sailing in stormy seas."

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