UK Unemployment Targets 3 Million This Year

By: Nadeem_Walayat

UK Unemployment shot up by 71,000 for January 09 data to 12 year high of 2.1 million to officially stand at 6.7% of the workforce, 2.1 million is exactly on target as per my forecast of October 2008. However the more up to date unemployment claimant count data continued to soar, rising by 64,000 in March to 1.52 million, which is up more than 50% on the 970,000 figure of 6 months ago and acts as a leading leading indicator which signals much higher forward unemployment data as illustrated by the below graph

My original UK unemployment forecast based on July 08 data is for unemployment to rise to just above 2.5 million by April 2010, however the UK economy continues to deteriorate at an alarming rate with projections of a severe recession of more than a 6% GDP contraction implies that the UK is heading for an unemployment rate that could pass above 3,000,000 by the end of this year. The near vertical assent in the claimant count for Feb and March 09 totaling 241k implies sharply higher unemployment for Feb and March, this despite the fact that the unemployment statistics are heavily manipulated to under report true level of unemployment which would be 5.75 million higher if all those of working age (16 to 64) were included in the data as illustrated below, the actual dip in total inactive is due to net migration as eastern european workers are apparently returning home in the face of increasing difficulties in the UK labour market.

UK Unemployment Time bomb

My Analysis of 21st February 09 ( UK Unemployment Time Bomb to Explode July 2009) warned that there exists the unemployment time bomb of the estimated 600,000 of school, college,leavers and graduates that are expected to join the labour market in July 2009 which could result in a surge of unemployment of as many as 250,000 in a single month, with also extra high unemployed numbers for subsequent months, this factor is now also starting to be recognised by the mainstream press.

Budget Deficit

The 50% surge in claimant count is resulting in much higher benefits payments of approximately £5 billion per year whilst at the same time putting the squeeze on lost tax revenues which is contributing towards the £175 billion announced budget deficit for 2009. For more analysis on the budget see my earlier article - Darling's Recession Debt Crisis Budget, Britain's £1.2 Trillion Public Sector Black Hole

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By Nadeem Walayat
http://www.marketoracle.co.uk

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Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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