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Higher trend in unemployment predicted

MPs have been told the UK will see higher levels of unemployment than forecast by the Office of Budget Responsibility.

The OBR says the total number of people unemp- loyed in the three months to the end of January hit 2.53 million. It forecasts that total will reach 2.6 million later this year and then fall back to 2.5 million next year and 2.1 million by 2015.

Giving evidence to the Treasury select committee as part its inquiry into the Budget last week, Capital Economics managing director Roger Bootle said: “One of the reasons why I think private sector job losses have not been greater is that we have not yet seen the full impact of the squeeze, not just the public sector squeeze but also the squeeze on consumer real incomes. This is a real vulnerability with the OBR’s forecasts.”

National Institute for Economic and Social Research director of macroeconomic research and forecasting Ray Barrell told MPs: “I suspect that unemployment will rise rather more than the OBR currently suggests.

“In the long term, unemployment is likely to be scarred by this recession and I would expect the sustained level of unemployment to lift above the number that the OBR has given.”

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There is one comment at the moment, we would love to hear your opinion too.

  1. Julian Stevens 4th April 2011 at 9:24 am

    I fear he may be right, and any notion that the private sector will soak up the fallout from the public sector is just pie-in-the-sky wishful thinking, as is the idea that spending more money that the government doesn’t have will stimulate the economy. Labour tried that at a time when it should have been paying down past debt, which is why the public sector finances are in the dire straits they are now.

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