Jobless queue grows as youth unemployment hits one million

Slowing rate of job losses gives rise to optimism that the worst of the recession is over
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The Independent Online

Britain's queue of unemployed workers is set to lengthen this week when unemployment figures are released on Wednesday.

However, economists predict that the rate of unemployment growth could slow – a further sign that the British economy is edging its way out of recession.

Unemployment reached 2.38 million in May – a 12-year high – with many economists predicting that the three million barrier could be breached by the end of the year.

The gloomy forecast from the influential Centre for Economic and Business Research is that the British dole queue could be four million strong by the end of the recession.

"Unemployment will continue to rise and there will be a steady increase in the second half of the year," said Stuart Thomson, chief economist at Ignis Asset Management. "But unemployment has risen by far less than expected, especially given the collapse in GDP."

Simon Ward, chief economist at Henderson, said: "I'm rather more optimistic than most because I don't think we'll breach three million by the end of 2009. I think two-and-three-quarter million is more likely."

This week's figures are once again expected to show spiralling youth unemployment, with the number of 16 to 24-year-olds out of work breaching the one million mark. In July, the Prince's Trust said a young person was losing a job almost every minute in the second quarter of the year.

Meanwhile the Bank of England Governor, Mervyn King, will unveil the central bank's latest inflation forecast, also on Wednesday.

In June, the Bank said the key Consumer Prices Index stood at 1.8 per cent. Many economists expect that the rate of price increases as measured by the CPI will continue to slow.

Last week, the Bank said it was ploughing in an additional £50bn into the UK economy through its programme of quantitative easing.

On Friday, American stock markets rallied after the number of people out of work fell for the first time in 15 months. Supporters of President Obama said it was an indication the gigantic $800bn stimulus package injected into the US economy was having an effect.