Unemployment has soared by 49,000 to 2.5 million, with a record number of young people out of work, new figures showed today.
One in five 16 to 24-year-olds are jobless after an increase of 32,000 in the quarter to November to 951,000, the highest figure since records began in 1992.
Employment levels have fallen, redundancies have increased and the number of people classed as economically inactive has reached 9.3 million, today's grim figures revealed.
The only bright news from the Office for National Statistics was a 4,100 fall in the number of people claiming Jobseeker's Allowance last month to 1.46 million.
The unemployment rate is now 7.9%, but for 16 to 24-year-olds it is 20.3%.
There were 157,000 redundancies in the latest quarter, up by 14,000 on the previous three months.
The inactivity rate is now 23.4% after an 89,000 increase in the number of people classed as economically inactive, including students, those looking after a sick relative and people who have given up looking for a job.
The number of people who have taken retirement before reaching 65 increased by 39,000 to 1.56 million, the highest figure since records began in 1993.
Employment fell by 69,000 to 29 million, the biggest drop since the summer of 2009.
Public sector employment fell by 33,000 to six million between last June and September, while the number of private sector employees remained unchanged at 23 million.
Long-term unemployment - those out of work for more than a year - rose by 15,000 to 836,000.
Other data showed that average earnings rose by 2.1% in the year to November, unchanged from the previous month.
Average weekly pay in November was £455, up by 2.1% on a year earlier.
Employment Minister Chris Grayling said: "These figures serve to underline the scale of the challenge we face. We inherited the largest budget deficit in peacetime history and high levels of worklessness, which we are determined to bring down by rebalancing the economy and supporting private sector jobs growth.
"We are already seeing some improvement in the number of vacancies in the economy.
"More personalised support for jobseekers will be on offer through Jobcentre Plus and for the long-term unemployed who need extra help we are introducing our Work Programme in the summer, which will offer support tailored to individuals' needs so that they can get into jobs and stay there."
TUC general secretary Brendan Barber said: "Today's grim jobless figures show that rising unemployment is more than an autumn blip, and that it could get much worse in 2011.
"With more than a fifth of young people out of work, we face a real danger of losing another generation of young people to unemployment and wasted ambition.
"By abolishing EMA, pricing young people out of university and cutting support to get them back into work, the Government is punishing youngsters for a mess they didn't cause.
"Employment is now falling at its fastest rate since the recession and many of those finding work are settling for insecure temporary work.
"With the worst of the cuts still to come, this government risks making high joblessness a permanent feature of our economy. It must change course before it's too late."
Dave Prentis, general secretary of Unison, said: "It's no surprise that the job loss totals are creeping up. The coalition's policies are poisonous for our recovery, and risk a downward spiral for our economy.
"Drastic cuts have hit the public sector, which is shedding jobs. These cuts dampen demand and hit private firms dependent on public sector contracts. The private sector is no knight on a white chariot waiting to come to our rescue.
"It's misery for families, hit with a toxic cocktail of high inflation which is pricing them out of everyday living, and dwindling job opportunities. Meanwhile it's easy street for the bankers who caused this crisis, and are still making off with billions in bonuses."
Martina Milburn, chief executive of youth charity The Prince's Trust, said: "Britain is now perilously close to seeing one million young people struggling to find work. At this time when there is huge pressure on the public purse, Government, charities and employers must work together to help young people into jobs and save the state billions."
Paul Kenny, GMB general secretary, said: "This rise in the number of people unemployed at a time when the economy is recovering from the bankers' recession is linked to not filling vacancies right across the public sector and to people of working age volunteering for redundancy being added to the dole queues. The Government is in denial that it is deliberately creating unemployment, but the fact is that it is driving up the level of unemployment."
The GMB said 125,894 job losses had now been announced by 165 authorities, adding that it was difficult to see the private sector creating enough new jobs to make up for the cuts.
David Kern, chief economist at the British Chambers of Commerce, said: "These figures are disappointing and once again slightly worse than expected. For the second month in a row unemployment is up, employment is down and the level of inactivity has seen a marked increase.
"Employment has declined for both full-time and part-time jobs and the number of people working part time because they could not find a full-time job rose to its highest level since comparable records began in 1992. In addition, a record number of young people are out of work.
"While longer-term trends still show that the UK labour market remains relatively robust, the new figures highlight the challenges facing the economy in the months ahead when the austerity programme is implemented more forcefully.
"In light of these figures, we reiterate our forecast that unemployment is likely to increase to 2.6 million over the next year, a further net rise of around 100,000. With the prospect that private-sector employment could decline over the next year, it is critical that private-sector businesses are able to create new jobs."
John Walker, chairman of the Federation of Small Businesses, said: "The true effects of the public sector cuts are beginning to show as growth remains weak, so these figures are worrying reading. The Government has said it is putting its faith in the private sector to pull the economy on to firm ground and create jobs, yet our research shows that small businesses expect job creation to weaken in coming months because they lack confidence in the economy - 12.4% of small firms expect to decrease their number of staff.
"It is now imperative the Bank of England keeps it nerve and holds interest rates at 0.5%, and crucially that the Government brings forward plans for growth, including a competitive tax system, and holds off on any new employment laws to boost job creation and instil confidence. Without this, growth will be difficult for small businesses to achieve."
Unemployment in the regions between September and November was:
North East / 120,000 / plus 5,000 / 9.6%
North West / 260,000 / minus 17,000 / 7.6%
Yorkshire/Humber / 241,000 / minus 6,000 / 9.2%
East Midlands / 186,000 / plus 15,000 / 8.1%
West Midlands / 264,000 / plus 48,000 / 9.9%
East 199,000 / minus 5,000 / 6.6%
London / 382,000 / plus 5,000 / 9.2%
South East / 273,000 / minus 8,000 / 6.1%
South West / 159,000 / plus 6,000 / 5.9%
Wales / 123,000 / plus 4,000 / 8.4%
Scotland / 225,000 / minus 5,000 / 8.4%
N Ireland / 65,000 / plus 7,000 / 7.8%