Unemployment rise may trigger increase in debt

The level of unemployment has surged to its highest level since 1994, the Office for National Statistics (ONS) has revealed.

In the three months to October the rate of joblessness rose by 128,000 – or 0.4 per cent of the working population – to 2.64 million, with means 8.3 per cent are out of a job.

Debt management plans may be needed by a large number of people as the loss of a job can often mean such a plunge in income that paying off loans and credit card bills – which may previously have been quite manageable – will suddenly become very difficult.

The biggest contributors to unemployment included the 67,000 drop in public sector jobs, contrasting with a net increase of just 5,000 new posts in the private sector.

And youth unemployment rose to a new record high over the period of 1.03 million, although the ONS said that this was under a method of counting being used since 1992 and it may have been higher in the mid-1980s.

Unemployment could be set to rise yet further as the UK has been widely tipped to slide into a new recession, with the problems in the eurozone seeing the single currency blog declining.

One such prediction has come from F&C Investments, with investment expert at the firm Ted Scott recently stating: "If the Eurozone, including Germany, does fall into widespread and full recession, it will probably tip the UK into recession as well, as Europe remains our largest trading partner."

By Joe White