Job figures are horrendous but hardly a surprise

This was always an ideological attack on the state and the young are going to have to pay.

The ONS data release on the labour market this morning was horrendous. Unemployment jumped to 8.1 per cent, up 0.4 per cent on the quarter. The total number of unemployed hit 2.57 million, which is the largest quarterly increase since the three months to July 2009. Nearly 900,000 have been unemployed for at least a year and 425,000 for at least two years. The unemployment rate is now in double digits in the north east (11.3 per cent) and in London (10 per cent).

The number of people in employment aged 16 and over fell by 178,000 on the quarter and by 47,000 on the year to reach 29.10 million. This is the largest quarterly fall in the number of people in employment since the three months to July 2009.

The number of people working part-time fell by 175,000 over the quarter to reach 7.78 million. This is the largest quarterly fall in the number of part-time workers since comparable records began in 1992. Inactivity was also up and wage growth remains benign.

Most worrying was the rise in youth unemployment, which is now at 991,000. Next month, it surely will hit the million mark, as the cohort who left schools, colleges and universities fail to find jobs. Plus, of the 17,000 increase in the claimant count, 9,900 was among 18-to-24-year-olds.

The youth unemployment rate was 21.3 per cent over the three months between June and August 2011, an increase of 1.6 per cent on the previous quarter. Worst of all, a quarter of a million youngsters under the age of 25 have been unemployed for at least a year. Long spells of unemployment while young can create permanent scars.

The rise in youth unemployment is hardly a surprise, given the government abolished the Future Jobs Fund and the Educational Maintenance Allowance and reduced the number of university places. This coalition appears to be dead set on creating a lost generation. I first started warning that this was coming in 2009 and the Labour government responded and successfully got youth unemployment down, so the blame for the rise rests entirely at the coalition's door.

Interestingly, the ONS also reports an alternative measure of youth unemployment. This measure, which was introduced in its April 2011 data release, measures the youth unemployment rate "excluding people in full-time education". According to this measure, there were 721,000 unemployed 16-to-24-year-olds between June and August 2011.

This alternative measure of youth unemployment was introduced by ONS back in Spring 2011 in response to pressure from the Secretary of State for Work and Pensions, Iain Duncan Smith, who argued that this was the most appropriate measure to focus on. Youth unemployment among 16-to-24-year-olds increased by 74,000; the number of unemployed who were not in full-time education increased by 78,000.

Yes, that's right; it increased by 78,000. Unsurprisingly, we have heard little on this measure today.

In response, the Employment Minister, Chris Grayling, said:

It is clear that we are seeing the effect of the international economic crisis on the UK labour market. That's why, last week, we announced the right-to-buy housing scheme to support growth and today we are offering more support for jobseekers as sector-based work academies come on stream, combining real training, work experience and a guaranteed interview. Our new work programme is now up and running and offers people who have lost their jobs flexible, tailored support to get back into jobs and stay there.

I guess Grayling has to blame somebody but his comments are not credible. Unemployment is rising because of the government's failed austerity programme, plus a front-loaded public-sector job cull. Take responsibility -- tailored support doesn't work when there aren't any jobs. Guaranteed interviews will not work when, according to your data, there are 2.5 million unemployed and only 500,000 vacancies.

The work programme is already an expensive failure because there is insufficient demand in the economy, simple as that. Feeble excuses don't wash.

This inept coalition has no strategy for jobs or growth and its austerity plan is lowering growth fast and destroying jobs, as I have been warning for a while. This is as good as it gets, because unemployment is expected to rise inexorably from here for many more months and, based on current policies, it is hard to see where it stops.

George Osborne and his team believed in expansionary fiscal contractions, which mean that cuts in public spending allow the private sector to blossom. There was no believable empirical evidence to support such a contention and it hasn't worked.

I understand from my sources that cabinet members are close to panic as they have no idea what to do now -- the slowing economy has taken them entirely by surprise.

This was always an ideological attack on the state and the young are the ones who are going to have to pay.

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

Photo: Getty
Show Hide image

The three avoidable mistakes that Theresa May has made in the Brexit negotiations

She ignored the official Leave campaign, and many Remainers, in pursuing Brexit in the way she has.

We shouldn’t have triggered Article 50 at all before agreeing an exit deal

When John Kerr, the British diplomat who drafted Article 50 wrote it, he believed it would only be used by “a dictatorial regime” that, having had its right to vote on EU decisions suspended “would then, in high dudgeon, want to storm out”.

The process was designed to maximise the leverage of the remaining members of the bloc and disadvantage the departing state. At one stage, it was envisaged that any country not ratifying the Lisbon Treaty would be expelled under the process – Article 50 is not intended to get “the best Brexit deal” or anything like it.

Contrary to Theresa May’s expectation that she would be able to talk to individual member states, Article 50 is designed to ensure that agreement is reached “de vous, chez vous, mais sans vous” – “about you, in your own home, but without you”, as I wrote before the referendum result.

There is absolutely no reason for a departing nation to use Article 50 before agreement has largely been reached. A full member of the European Union obviously has more leverage than one that is two years away from falling out without a deal. There is no reason to trigger Article 50 until you’re good and ready, and the United Kingdom’s negotiating team is clearly very far from either being “good” or “ready”.

As Dominic Cummings, formerly of Vote Leave, said during the campaign: “No one in their right mind would begin a legally defined two-year maximum period to conduct negotiations before they actually knew, roughly speaking, what the process was going to yield…that would be like putting a gun in your mouth and pulling the trigger.”

If we were going to trigger Article 50, we shouldn’t have triggered it when we did

As I wrote before Theresa May triggered Article 50 in March, 2017 is very probably the worst year you could pick to start leaving the European Union. Elections across member states meant the bloc was in a state of flux, and those elections were always going to eat into the time. 

May has got lucky in that the French elections didn’t result in a tricky “co-habitation” between a president of one party and a legislature dominated by another, as Emmanuel Macron won the presidency and a majority for his new party, République en Marche.

It also looks likely that Angela Merkel will clearly win the German elections, meaning that there won’t be a prolonged absence of the German government after the vote in September.

But if the British government was determined to put the gun in its own mouth and pull the trigger, it should have waited until after the German elections to do so.

The government should have made a unilateral offer on the rights of EU citizens living in the United Kingdom right away

The rights of the three million people from the European Union in the United Kingdom were a political sweet spot for Britain. We don’t have the ability to enforce a cut-off date until we leave the European Union, it wouldn’t be right to uproot three million people who have made their lives here, there is no political will to do so – more than 80 per cent of the public and a majority of MPs of all parties want to guarantee the rights of EU citizens – and as a result there is no plausible leverage to be had by suggesting we wouldn’t protect their rights.

If May had, the day she became PM, made a unilateral guarantee and brought forward legislation guaranteeing these rights, it would have bought Britain considerable goodwill – as opposed to the exercise of fictional leverage.

Although Britain’s refusal to accept the EU’s proposal on mutually shared rights has worried many EU citizens, the reality is that, because British public opinion – and the mood among MPs – is so sharply in favour of their right to remain, no one buys that the government won’t do it. So it doesn’t buy any leverage – while an early guarantee in July of last year would have bought Britain credit.

But at least the government hasn’t behaved foolishly about money

Despite the pressure on wages caused by the fall in the value of the pound and the slowdown in growth, the United Kingdom is still a large and growing economy that is perfectly well-placed to buy the access it needs to the single market, provided that it doesn’t throw its toys out of the pram over paying for its pre-agreed liabilities, and continuing to pay for the parts of EU membership Britain wants to retain, such as cross-border policing activity and research.

So there’s that at least.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

0800 7318496