Unemployment Rises at Lower Pace than Expected

Date: October 15, 2009

Signs of economic recovery which have been hailed since August are showing signs of continuing with a small rise in unemployment for October. The rise in unemployment was expected to be greater for the autumn months as employment is one of the last sectors to recover from recession, however this months decline is smaller than was predicted by City forecasters. According to the National Statistics and the International Labour organisation (ILO) unemployment claims to have risen to 20,800 below economic expectations of a 24,500 rise, leaving the current rate of unemployment at 7.9%.

Paul Kenny, general secretary of the Britain’s General Union, (GMB), said “Bad as these figures are, there some tentative signs of a very fragile recovery in the economy, which is due in no small part to the monetary policy being followed by the Bank of England and the fiscal policies of the Treasury.”

Employment Minister, Jim Knight, has an optimistic view and revealed to This is Money that 5,000 new jobs have been created with the help of £5bn injection from the Government’s Future Jobs Fund. The Fund guarantee young people under 25 employment or trainee scheme at the end of 12 months of jobseeker allowance claim.

However there is uncertainty about the future recovery given the continued shortage of bank lending despite Bank of England and government measures to help get credit flowing again. Experts also predict an increase in the unemployment rate that could top up at 10% in 2010. Economists are cautious to talk about a strong recovery, and a sustainable recovery is not guaranteed in the near future, nevertheless, Philip Shaw, ‘chief economist at Investec Securities in London, says that we can take comfort from the slow rise of unemployment number and there is justification for a bit of optimism.