Unemployment set to keep on rising, says forecaster

image captionThe unemployment rate in the UK is currently 8.3%

Unemployment in most parts of the UK is likely to continue to rise over the next five years, according to an economic forecasting group.

The Centre for Economics and Business Research (CEBR) says the overall jobless rate could hit 10.7% by 2016, the highest for more than a decade.

And it says it could ultimately rise to levels not seen since the early 1990s.

The government says that view is "extremely pessimistic" and "different to the view of many economic bodies".

UK unemployment fell by 35,000 to 2.65m between last December and February.

BBC business correspondent Ben Thompson says the CEBR warned that areas reliant on public sector jobs and government spending will be badly hit - especially Wales, Scotland and the North East of England.

But in Northern Ireland, where almost one in three people now work in the public sector, the impact could be even worse, he said.

The report suggests the jobs market in London, the South East and East of England will remain "relatively buoyant".

That is down in part to a stronger private sector - which is more able to make up for losses in the public sector.

Rob Harbron, one of the report's authors, said: "Five more years of pain are expected for much of the UK, with unemployment continuing to rise in almost every region.

"The outlook is tough for UK households, particularly those in places with a high dependency on public sector employment.

"Family budgets are being squeezed between the pressures of rising unemployment, low earnings growth and stubbornly high inflation."

Experts predict unemployment is expected to rise again with local authorities and other public sector bodies shedding jobs to cut costs.

The union Unison said 625 public sector jobs had been axed every day since the general election in May 2010.

Motoring job cuts

Minister for Employment Chris Grayling said the government was "focusing on stabilising public finance, supporting economic growth and helping the unemployed".

"Every major international economic body says we are doing the right thing," he added.

"We are determined to restore growth and get unemployment falling again."

Liam Byrne MP, shadow secretary of state for work and pensions, said unemployment was still "unacceptably high" and that the country was sliding back into a recession "built in Downing Street".

He added: "Ministers cannot afford to continue to stand aside, they must now accept responsibility for Britain's jobs crisis and take decisive action.

"They should start with Labour's five point plan, including a Real Jobs Guarantee, paid for by a tax on bankers' bonuses, that would guarantee a proper job for 110,000 young people out of work for a year, which they would have be made to take."

Last week, the head of Ford's European operations warned jobs would be lost in the car industry following free trade deals with some Asian economies which had increased imports.

Car sales in Europe have fallen from around 18.5 million a year before the downturn to an expected 14 million this year.

GM is currently reviewing its European operations, leading to concerns about the future of its Ellesmere Port plant in Cheshire.

The plant employs more than 2,000 people and produces the Vauxhall Astra model.

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