Jobless total will continue to rise, says Darling

UK unemployment will continue to rise, the Chancellor warned yesterday. In a departure from the usual convention that chancellors refrain from attempting to predict the course of the jobless numbers, Alistair Darling told MPs that "although unemployment in this country is too high... unfortunately it will continue to rise for a while", adding that "the unemployment levels... are lower than they are in America, France and many, many other countries".

Most economists would agree with the letter of Mr Darling's remarks, though the most recent evidence is that the pace of the increases is slowing markedly and they generally stress how well the UK has been doing in keeping joblessness down. Indeed on one reading of the official statistics, unemployment has been falling during the last two months, to stand at just under 2.5 million, or 8 per cent of the workforce. Youth unemployment has reached close to 1 million.

The Governor of the Bank of England, Mervyn King, and the director general of the CBI, Richard Lambert, are among senior figures who have recently pointed out how modest the rise in British joblessness has been given the 6 per cent fall in GDP seen since the spring of late year. The UK's relatively flexible labour market and historically low wage increases are some reasons for the comparatively slow growth in unemployment. Official figures show a rise of about 800,000 in the number of Britons who are in temporary or part-time work while seeking permanent and full-time positions. However, the US, where labour markets are even more liberalised, has seen a much heavier loss of jobs.

The Chancellor's downbeat remarks came as the stock market was shaken by the potential fallout from the Dubai crisis. Closer to home, the CBI reported hopeful signs in the run-up to the Christmas shopping season. The CBI's Distributive Trades survey for November showed a rise in the reported sales balance, with a net 15 per cent of respondents reporting a rise, up from a score of 8 per cent in October and the highest reading since August 2007. This, analysts at Capital Economics suggested, points to a monthly rise in sales in excess of 1 per cent. But they point out that spending may be receiving a boost from the bringing forward of some purchases ahead of the VAT rise on 1 January. If this is the case, then "the price of a buoyant Christmas on the high street may be a disappointing January sales period".

Some retailers are saying that trade is brisk. John Lewis has seen sales up 20 per cent on this time last year. Andrew Murphy, director of operational development, said: "For Sunday to Wednesday this week we are trading over 20 per cent up on last year which, if sustained through the weekend, will represent the strongest year-on-year comparison we have seen in 2009. These figures reflect some really heavy customer spending on technology and home ranges over the last four days."

Mr Darling came under fire yesterday from the chairs of the Treasury Select Committee, John McFall, and the Public Accounts Committee, Edward Leigh. Mr McFall said Parliament had been "short-changed" on the failure to tell him confidentially at the time about the Bank of England's £62bn emergency loans to HBOS and RBS last year. Mr Leigh added that the secrecy was a "serious matter" and "contrary to ancient traditions and conventions". The Speaker, John Bercow, has also taken an interest in the matter.