By Max Clarke
Today's labour market figures showed unemployment jump to a 17 year high of 8%. David Kern, Chief Economist at the British Chambers of Commerce (BCC), suggests the rising figures increase the urgency for job creation to be central to the next budget.
“These figures were mixed, but not as bad as some had feared. Unemployment and inactivity have risen in the three months to January, but employment is also up and the number of people claiming benefits has fallen. While we were pleased to see an increase in private sector employment in the fourth quarter of the year, these figures also show a further increase in youth unemployment which is at a new all time high.
“With the Government’s austerity plan likely to result in further cuts in public sector jobs, we reiterate our forecast that total unemployment is likely to increase to 2.65m over the next 12-15 months before it starts declining. These figures prove that the private sector is willing and able to create new jobs, and the Government must now use next week’s Budget to scrap regulatory burdens preventing businesses, particularly smaller firms, from employing new staff. BCC research shows that businesses face a bill of £22bn over the next four years just to implement new employment legislation.
“The rise in earnings remains muted at just over two per cent and well below inflation, which should reassure the MPC that there is currently no risk of a wage-price spiral. With recent events in Japan pointing to new threats for the global economy, there are now new arguments for the MPC to wait before raising interest rates.”