UK ‘set for nine per cent unemployment’

Unemployment in Britain is set to reach nine per cent of the working population this year, an economic analysis has concluded.

The National Institu…

Unemployment in Britain is set to reach nine per cent of the working population this year, an economic analysis has concluded.

The National Institute of Economic and Social Research (NIESR) has noted that the current level of gross domestic product is four per cent lower than at the peak of output before the first recession began in 2008, adding the estimate that the economy is no larger now than it was in September 2010.

Among the NIESR predictions for the economy are an expectation that growth will be barely above zero for 2012 as a whole, although it will be 2-2.3 per cent in 2013.

But in the meantime, the weak economic performance this year will lead to a rise in joblessness.

While noting the official figures showing the economy to be back in recession may be revised, the body said the issue of whether the UK is technically in a recession is "moot", since the key issue is the ongoing low growth, with the body calling the sustained weakness "unprecedented".

If such forecasts about the level of joblessness are true, it could lead to a situation where more people get into unpayable debt.

Many consumers are currently in a position where they can afford their loan, card and mortgage repayments, but would not be able to cope if they lost their main source of income.

In such circumstances debt can quickly spiral out of control and many people may already have found out to their own dismay how this can happen.

For people in debt by £15,000 or more and unable to pay it, an individual voluntary arrangement may be the best solution, as it would involved negotiating lower repayments to be made over a period of no more than five years, providing light at the end of the tunnel.

The NIESR predictions follow a report by the Confederation of British Industry suggesting the UK will resume economic growth in the second half of this year and enjoy a significant improvement next year, but not before unemployment climbs to a peak of 2.86 million in early 2013.

By Joe White

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