Outlook There is no shortage of negatives to focus on in the latest unemployment data – the growth in the long-term unemployed, the numbers of people economically inactive, the fall in full-time work, for example – but the most worrying thought of all is that this may be the calm before the storm.
For unemployment, the magic number is 2.5 per cent. That, according to the Chartered Institute of Personnel and Development, is the rate of economic growth the UK needs to achieve each year between now and 2015 for the private sector to create enough new jobs to offset the job losses in the public sector that will be caused by spending cuts.
There is not much margin for error. The Office of Budget Responsibility reckons growth will be 1.3 per cent this year, 2.6 per cent next and then 2.8 per cent in both 2012 and 2013. On the CIPD's data, we only have to undershoot those forecasts by a small amount for the result to be further increases in total joblessness.
That rather puts the debate about the double dip into context. It won't take a relapse into recession for unemployment to rise sharply – though that sort of decline would be really disastrous for the jobs outlook – but just a slightly weaker recovery than the OBR is currently expecting.
To translate that warning into some numbers, the OBR's current unemployment estimate is for the rate to peak at 8.1 per cent this year and then fall to 6.1 per cent by 2015. The CIPD reckons a more realistic forecast would be a return to rising unemployment over the next 18 months, with the number out of work peaking at 9.5 per cent in 2012 and then falling back to 8 per cent in 2015.
In five years' time it reckons 2.5 million people will be unemployed, no fewer than today.Reuse content