UK unemployment rate expected to fall

Official figures due later are expected to reveal UK unemployment easing back further, but will do little to ease fears of a “jobless recovery”.

Experts are predicting statistics will show unemployment fell by 65,000 in the three months to June, to 2.45 million, after another rise in employment levels.

However, a recent surge in employment has been almost entirely attributed to soaring numbers of people taking part-time work because they could not find a full-time job.

The fall in headline unemployment is also likely to be only a brief respite before the Government’s spending cuts take effect, according to research.

A survey of 600 employers earlier this week found that a third expected to cut jobs in the next three months – the worst figure for a year and up from one in four at the end of 2009.

The study by the Chartered Institute of Personnel and Development predicted that unemployment overall would rise as public sector job losses would offset a rise in private sector jobs.

The Treasury itself has estimated that there will be 600,000 public sector job cuts over the next five years.

Howard Archer, chief economist at IHS Global Insight, said: “Unemployment could well continue to fall in the near term, but we suspect that it will start to head back up later this year and then increase further in 2011 and early 2012.”

He believes the private sector will also become cautious in its employment plans amid concerns the fiscal squeeze will hold back growth in the wider economy.

“Many firms are likely to try and meet any increase in business through making greater use of the workers they have already and they are likely to be reluctant to take on any more staff,” he added.

Source: Press Association