UNEMPLOYMENT IN Britain has reached near 20-year highs, youth unemployment now stands at record levels, while the Bank of England warned yesterday that the journey to recovery will be “long and arduous”.
Labour leader Ed Miliband rejected repeated declarations by the Conservative/Liberal Democrat coalition that the economic woes are worsened by the euro zone crisis, while one senior Liberal Democrat figure was equally dismissive of the government’s defence.
However, the governor of the Bank of England, Sir Mervyn King, said the future of the euro is “the single biggest risk” to the British economy, warning that there is now a significantly increased danger of a double-dip recession next year.
Prime minister David Cameron meets German chancellor Angela Merkel in Berlin today, where both sides will have to work hard if they are to hide the deep differences that exist between them on the actions necessary to cope with the debt crisis.
Predicting that UK growth this year and next will be more than 1 per cent – far below the Bank of England’s original predictions of 1.5 per cent for 2011 and 2.2 per cent for 2012 – Mr King said: “The journey to a more balanced world economy will be long and arduous.”
Financial experts believe growth could be zero.
The governor held out some good news, saying that UK inflation – currently over 5 per cent – will drop rapidly next year and will stay low, adding that he believed that UK growth would resume once “the euro zone area gets through these difficulties”.
Interest rates are at historic lows and will not rise, offering good news for mortgage-holders, while the Bank of England is now expected to put another £75 billion into circulation by February in an effort to keep credit flowing, though markets believe that could happen as early as next month.
Unemployment among those aged between 16 and 24 rose last month by 67,000 to 1.2 million – the highest figure recorded since statistics began to be kept in 1992, while overall unemployment increased in a month by 129,000 to 2.62 million – the worst performance since 1994.
Commenting on the unemployment figures, Trades Union Congress general secretary Brendan Barber said the “milestone” of having one million young people on the dole “is the true mark of the government’s economic strategy”.
“Rather than using the euro zone as an excuse for our mounting economic troubles, the government should be using it to change course. The 2.6 million people out of work is the clearest sign yet that self-defeating austerity is not working,” he said.
Minister of state for works and pensions Chris Grayling said the one million figure “is a bit of a distraction” since it includes 300,000 in full-time education.
Liberal Democrats business secretary Vince Cable said the government will cut bureaucratic rules to boost apprentice numbers. “When times are tough, it’s right that we provide additional support to help the smallest firms meet training costs,” he said.
