Debt may rise as unemployment tipped to near 3m

Unemployment is set to rise further over the coming 12 months as the UK economy continues to struggle in the wake of the global economic downturn.

Unemployment is set to rise further over the coming 12 months as the UK economy continues to struggle in the wake of the global economic downturn.

This is the prediction of the British Chambers of Commerce (BCC), which expects unemployment in the country to rise to 2.9 million in the first quarter of 2013 – the equivalent to nine per cent of the workforce.

In the final quarter of 2011 the figure stood at 2.67 million – 8.4 per cent of the working population – meaning a net increase of around 230,000 jobless workers is forecast.

A rise in the number of people losing their job is likely to result in debt levels climbing and individuals who find they are left unemployed may need to follow a debt management strategy until they begin earning again.

Increasing unemployment is one result of the tough economic conditions businesses have to endure at present and director general of the British Chambers of Commerce John Longworth explained it is the private sector that is most likely to drive economic recovery.

"Companies need the best possible environment to generate wealth and create jobs," he remarked, adding a sustainable recovery "depends on creating the right conditions to empower businesses to drive growth.

Cutbacks are commonplace across many firms but one business that is creating roles is Tesco, which announced today (March 5th) that it will expand its workforce by 20,000 over the next two years with positions in new and existing stores.

In a statement, the retail giant said it expects to focus on providing opportunities to young people who are currently out of work, adding: "This move will be a major step in tackling the current record levels of youth unemployment."

The BCC said that despite the ongoing downbeat outlook it is likely the UK will avoid a double-dip recession, however gross domestic product growth in the first two quarters of this year will be slight.

"We expect UK economic growth to improve gradually from the second half of 2012 onwards, and to strengthen during 2013," remarked BCC chief economist David Kern.
 

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