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Will Unemployment hit 3 Million in the UK?


We have been predicting that the public sector cuts to come were more likely to see the UK hitting 3 million unemployed than 2 million and a Price Waterhouse Cooper’s report independently flags up the issues.

For parts of the UK, it will mean one in 20 people lose their job over the next four years as a result of the £83bn public spending cuts to be announced by the Chancellor next week.

According to PwC private sector output could be slashed by £46bn, or 2pc of the total. This would not be enough to push the economy back into recession, it said.

Furthermore PwC is forecasting, that the private sector will only generate around 1m new jobs over the next four years in areas such as outsourced business services and social care. This is far fewer than the 1.6m new jobs predicted by the independent Office for Budget Responsibility in June.

Of the industry sectors most exposed to the spending cuts, PwC said business services will shed 180,000 jobs and construction 100,000.

Job losses across the public and private sector are likely to hit 5pc of the total workforce in Northern Ireland, and 4pc in Wales, Scotland and the North East, although overall more jobs will be lost in London and the South East because their economies are larger.

UK-based manufacturers of leather goods and footwear, electronic components, weapons and ammunition and office machinery and computers will all be hit hard by the cuts claim PwC.

Unemployment coupled with lower demand will keep interest rates lower for longer, benefiting businesses. However a rising tax take and a weaker international trading environment would act as a drag on growth.

There is more pain ahead.

 

Author: Chris Slay

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