Unemployment high will tip more into debt, says Trust Deed Scotland
The latest unemployment figures show that hundreds of thousands more people have been plunged into unemployment over the last three months, and the UK can expect a worsening of the debt crisis as a result warns Scottish Debt Solutions Company, Trust Deed Scotland.
United Kingdom (PRUnderground) December 12th, 2011
The Office for National Statistics reported a 17-year high in unemployment of 2.5 million jobless, with 114,000 alone being made redundant between June and August. This is far beyond the forecasted 20,000 expected for this period and has prompted fears that the UK is about to be tipped into a double dip recession. The economic slowdown has resulted in the highest number of unemployed since the autumn of 1994, while the actual proportion of unemployed to employed stands at just over 12:1 or 8% of the workforce. With the recession recovery being acknowledged as being complicated by the debt crisis – the level of which currently stands at an average of £21,000 per person in the UK – the number of defaults and insolvencies is likely to rise in response as individuals are unable to meet their financial commitments. The National Institute of Economic and Social Research released a statement saying the economy was the weakest on record since the end of World War I, and that the apathetic growth in manufacturing combined with a reduction in the key services sector and stock market bloodbath pointed the way towards a double dip recession. In a recent speech to the Commons, David Cameron admitted more needed to be done, saying: “I accept we have got to do more to get our economy moving, to get jobs for our people, but we mustn’t abandon the plan that has given us record low interest rates.” Ed Miliband, leader of the Labour party, wants Mr Cameron to come clean and admit the current approach that the government is taking ‘isn’t working’. But some are not convinced the government is for turning. “Despite the weak labour market, the government is unlikely to significantly change course on fiscal austerity plans,” said Scott Corfe, senior economist at the Centre for Economics and Business Research (CEBR). “David Cameron, George Osborne and Nick Clegg all reaffirmed their commitment to ‘Plan A’ during party conference season and a U-turn on fiscal austerity would now prove politically embarrassing.” A spokesperson for Scottish Debt Solutions Company, Trust Deed Scotland, said: “This is not the kind of news that anyone in debt wants to hear. For those who have been made redundant, the next few months will be a nail-biting time as they struggle to get signed on with the benefits office and try to keep their head above water with their debt payments. A lot of people won’t be in a financial position to have a Merry Christmas and the New Year is likely to see a rash of debt defaults, insolvencies and property repossessions.” The statistics show that around 150,000 people were made redundant between June and August, which is up 6,000 from the previous quarter. However, it is the rate of employment that has caused the most damage, which slumped by 178,000 jobs and included the largest cull of part-time workers – 175,000 – ever seen during the same period. Most of these have come from the public sector. Economic advisor to the Ernst & Young ITEM Club, Nida Ali, said: “The public sector is clearly on a massive purge and the current environment of weak growth and a very uncertain outlook implies that private sector companies are being forced to delay recruitment or worse.” Some sectors of the industry are predicting worse to come in light of today’s figures: “This shouldn’t really come as a surprise – the economy is growing at half the pace it needs to in order to keep unemployment stable. That isn’t going to change any time soon – in fact it is probably going to get worse. Given this, we should get used to jobs reports like this one,” said Alan Clarke, an economist at Scotia Capital. However, the spokesperson highlights another story behind the unemployment figures when they are analysed according to age. “Over 991,000 16-24 year olds are out of work, which is the highest on record and double the average rate for the UK as a whole at 21.3%. That means over half of all 16-24 year olds in the UK are out of work. They are also one of the groups whose debt is rising at an astronomical rate due to the benefits system paying them reduced rates while inflation takes the same chunk of money off them that it takes off everyone else. Those who are independent still pay the same bills as 25+ years olds, yet they have to cope on far less benefits income. They are rapidly becoming the lost generation and it will take decades of hard work to right this and repair the damage to their careers and their self-esteem and morale.”