Can we really say that the recession is over?

Growth may be returning, but unemployment isn't going away. Sean O'Grady reports

While economists may agree that the recession is over and the recovery under way, albeit modestly, the pain of the downturn seems set to continue, with companies still shedding labour and few employers feeling confident enough to begin hiring permanent or temporary staff.

What's more, that pain is being spread almost arbitrarily across regions and class, with surprising results; research by the Local Government Association (LGA) reveals that education and training are less of a defence against the dole queue than might be assumed, as is living in a part of the country traditionally thought to be immune from economic hardships.

Some of the steepest rises in unemployment are being seen among golf-playing, Mercedes-driving executive types in "nice" places such as Windsor and Wokingham.

"The turmoil in financial services has had an effect in the South, especially the London commuter belt," the LGA says, but less-skilled workers in the South-east do not seem to have suffered the same impact. "Places which have recorded the highest increases in manager unemployment, like Runnymede, have some of the lowest increases in unemployment for those in 'elementary', ie unskilled, occupations." The LGA's research reveals that, in proportional terms, it is managerial staff in the South-east who have seen some of the largest rises in unemployment – up 162 per cent over the past year, with professionals (142 per cent) and skilled workers (140 per cent) not far behind. The unemployment rate of skilled and unskilled staff has risen by 58.3 per cent, though, being more numerous, the overall numbers and the absolute rate of joblessness they suffer remains much higher, and their financial ability to weather a period of enforced idleness is usually weaker.

The LGA warns that "a national, blanket policy to stimulate economic recovery doesn't work because each area of the country has been affected markedly differently by the recession".

Taking them together, the number of managers and professionals seeking job seekers allowance has risen over the past 12 months from 46,700 to 118,700, but the unskilled seeking benefits are up from 332,400 to 589,000.

The figures may understate the extent of white-collar unemployment, as they track the claimant count: many unemployed executives and professionals will be ineligible for job seekers allowance because of their savings.

Managerial unemployment shows a predictable bias towards the Home Counties – Windsor, Wokingham and Wycombe are black spots for executives – but there has also been a steep rise in managers going to Job Centres in places as diverse as Market Harborough, Redditch and Runnymede.

Jobless professionals are widely dispersed though London seems to be home to many. The two largest proportional rises have been recorded in the boroughs of Hackney and Islington, often caricatured as the last redoubts of the public sector professional.

Lambeth, Barnet, Hammersmith & Fulham and Brent are also represented at the top of the list of job losses but they all rank below St Albans, for example. Coventry, Woking and High Wycombe also have plenty of professionals thrown on to the dole.

Overall, the LGA concedes that unemployment rates have risen most quickly in the areas that might be predicted – the West Midlands, Yorkshire and south Wales, though less so in the North-west and North-east, which were already suffering.

Joblessness has hardly risen in some areas historically associated with long dole queues, such as rural Wales (Ceredigion), Cumbria (Barrow-in-Furness, South Lakeland, Eden) and the Derbyshire Dales.

Big rises in unemployment have also hit centres as varied as Torbay, Leicester and Gloucester, though not so of their closest neighbours. Some of the newer industrial zones are starting to suffer as much as the more established; the most substantial rises in unemployment among the skilled and unskilled have been witnessed in slightly less traditional locations, such as Swindon (home of Honda's UK manufacturing operations), Wellingborough, and Harlow.

By the same token, while qualified tradespeople in the Merseyside-Manchester corridor and engineers in Darlington, for example, have been affected by the recession, as would be anticipated, in some of those places benefit claims from the unskilled have barely risen. Corby and Swindon are among the areas experiencing the biggest increase in job seekers allowance claims.

Sir Jeremy Beecham, the vice-chairman of the LGA, said: "The needs of leafy middle-class suburbs are poles apart from the action that needs to be taken in more deprived inner-city areas. An unemployed factory worker from Barnsley or Birmingham needs to be retrained very differently from a City financial analyst.

"While the north of the country and the Midlands has borne the brunt of blue-collar job losses, it's the south that has seen a sharp rise in the number of managerial job losses."

Expert view: Prospects for UK plc

The financier

Jon Moulton, founder, Alchemy Partners

We're definitely getting worse much more slowly, and we might be somewhere near the bottom. We've dropped an enormous amount of money into the economy – all of which will, of course, be paid for by later generations – and the economy will probably respond to that and provide some minor upturn before the weight of that spending is going to push it back again. We'll have more debt relative to GDP than before, and that is at the expense of future growth. So, the most optimistic scenario is some alcohol-to-alcoholic effect, but the morning after will occur. It doesn't look very optimistic, and I sincerely hope I'm wrong.

The entrepreneur

Simon Tucker, managing director of Aim-listed Software Radio Technologies

Any notion that the recession is over will prove to be a false dawn. We are still facing a huge debt overhang that does not appear to be shifting any time soon and there are various industries that still have significant structural problems. For example, a recent report from IATA (the international body that represents airlines) said that airlines will lose over $9bn this year and I presume that some will fail. Coupled with increased unemployment, which further reduces spend in the economy, I see that we still have serious problems to overcome before this economic perfect storm is over.

The retailer

Terry Duddy, chief executive of Home Retail Group, which owns Argos and Homebase

I don't think the recession is over, not at all. I would need to see a lot more evidence than in just one quarter. Argos is still in negative like-for-like sales. I would like to see both Argos and Homebase in positive territory before I would think it has got through to the consumer. We would like to see a fantastic Christmas happen first and that would convince us. Above all, it is the disposable income and lower mortgage payments that is helping people. What people have not seen yet is the circumstance where unemployment is really starting to bite, which would impact on consumer confidence.

The investor

Simon Murphy, Fund Manager, Old Mutual Asset Managers

The equity market probably bottomed in March and, as the market cycle typically leads the economy by a few months, we should be able to look forward to better economic times ahead. Activity fell rapidly following the collapse of Lehman and as excess inventory was worked through it is difficult to see levels staying so low for long. The economy is very sensitive to movements in interest rates – currently at historic lows – while sterling weakness benefits exporters. Manufacturing, housing and consumer confidence are improving. Fiscal stimulus plans will provide a boost later in the year when money gets spent.

The academic

Dr Danny Dorling, Professor oF Human Geography, University of Sheffield

It makes no sense at this point to talk about the end of the recession. We won't know for another six months whether this is going to be a short recession like those in the 70s, 80s or early 90s or a fully-blown depression like that in the 1930s in which there were many moments where people thought they saw green shoots and predicted the start of a recovery. There were lots of false-start "recoveries" in the early 1930s. We won't know till the end of the year whether this one is going to be longer and deeper than anything since the 1930s. This is uncharted territory.

The adviser

Peter Sargent, president of R3, the association of business recovery professionals

I am not sure about these so-called green shoots. Between 1 October and the end of March our telephone was red hot, but then it started to get quiet and this continued in April and the first half of May. It was as if the economy had fallen off a cliff, but had landed on a ledge and was deciding what to do next. But in the last few weeks we have been busy. It is a lot of small and medium-sized businesses. We are still seeing a lot of construction and anything related to property. The problem comes when businesses are over-geared and they cannot cope with a slight decline in sales.