The Staggers

The New Statesman’s rolling politics blog

Osborne's next headache: rising unemployment

Unemployment is set to rise to 2.7m in 2013.

By George Eaton Published 31 August 2012 15:00

Chancellor George Osborne. Photograph: Getty Images.

Unemployment is expected to peak at 2.7m in 2013. Photograph: Getty Images.

As the economy has sunk deeper into recession, the Conservatives have pointed to falling unemployment as proof that their strategy isn't failing on every count. But what few have noticed is that almost every forecaster expects joblessness to rise over the next year.

Today, the British Chambers of Commerce said that it expected unemployment to increase from 2.56 million (8%) in Q2 2012 to 2.75 million in Q4 2013, a net increase of 186,000. It cited the planned spending cuts (most of which have yet to be implemented), the lack of growth, and rising productivity as reasons why the jobless total will rise. Similarly, the CBI said that it expected unemployment to rise to 2.7 million next year, despite the likely return of the economy to growth (the reverse of the trend that has so confounded economists).

Both the BCC and the CBI expect unemployment to start falling after 2013 but a year of rising joblessness will make it even harder for George Osborne to tell anything resembling a good story.

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Tags: George Osborne Conservatives unemployment

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32 comments

Mon, 2012-09-03 00:44 — Tosh Posh (not verified)

The only investment in the economy in my area is curry house, pizza house conversion and banana storage facilities in empty factories.

All the English shops have no customers, as they have no money.

If I need a newspaper I have to go four miles to a shop where English is spoken and where they do not try to convert my lottery tickets towards the shops bank account.

Sat, 2012-09-01 21:39 — Indu Pendent

George
The coalition story is that private sector employment is rising and public sector employment is falling -- the unemployment is frictional. UK labor costs (cost per hour) relative to the world market are falling and productivity (production per hour) is improving.

Wow!!!! the economy left by Labour is being mended. Even now Labour continues to prove it would be totally incapable of fixing its own mess.

The next 10 years look bleak but once the UK is leaner, more agressively competitive and harder grafting like it use to be then it will prosper. Labour wants to enjoy it and consume it all now, whatever it costs, without earning it, however much needs to be borrowed for our kids to repay.

We should set a national goal to try to catch up technologically with the Chinese rather than pursuing Labour's engrained mindset of being superior and owed a free living by the rest of the world .

Sun, 2012-09-02 09:10 — matthew fox (not verified)

Another 10 year of you Inastew, seems to be a bleak prospect.

Private sector employment, do you mean the increase in part-time private sector employment ?

What happened to the 2 million private sector jobs we were promised in 2010 from the OBR?

Sat, 2012-09-01 22:37 — Eddy S (not verified)

I would say the Tories are stuck in a cul-de-sac, there are no cuts in current spending. In fact it is capital spending that is being reduced, so I'm not sure how you can say the UK is going to get leaner.

What we have in fact is the worst of all worlds (with reduced capital spending) as it is capital spending that will drive long term growth. We need major investment in high speed rail, a super airport, flood defence protection, tidal energy generation , ultra high speed broadband backbones, super sewers etc. This can be financed by low interest on UK debt which would promote long term growth but this will only really work if we reduce current spending on state services and benefits (i.e. the structural deficit this is actually the root of the problem as it went out of control). Higher taxes on higher income groups and businesses will end up reducing growth and tax receipts so that really is not viable. However there is a case for reducing tax loop holes and providing simpler and flatter taxes which would actually ensure the rich may more tax and also be more transparent (however that requires politicians to make bold decisions like scrapping national insurance and adding the difference to income tax - there are too many interest groups that would have to be fought (the granny tax is a good example how a simplification can backfire when reform is not discussed openly and trade-off's not highlighted). Another good way of raising tax revenue without making serious impact on growth is through a land based wealth tax for the very top end.

Sun, 2012-09-02 02:15 — Indu Pendent

Not much a could disagree with.

Not so sure about the land tax as large amounts of land and buildings is held by pension funds, businesses, income generating estates where the income already gets taxed.

I'd raise VAT to 25% and hypothocate the tax to reducing PAYE and NI for the lower paid as it means companies will pay people less and so employ more of them. High VAT also penalises imports and consumption and gives a relative advantage to exporters.

Sun, 2012-09-02 09:00 — matthew fox (not verified)

Raising VAT to 25% Inastew, I thought the plan was an increase to 22.5% then 25% , have you changed your mind yet again, why?

I don't think motorists and business would like 25% VAT on petrol, you keen to bring back the horse and cart back into fashion?.

With the trade deficit at a record 15 year high, you numbers don't seem to stack up. Are you like James Murdoch, didn't you get the email, the UK imports 50% of its food, and have you got the first idea, how much energy the UK imports, the Tories love importing Russian coal.

Sun, 2012-09-02 10:12 — Indu Pendent

Foxy
Dont strain the grey matter too much.

You should finish your sentence "the Tories love importing Russian coal" ... "because, even though the UK is leading the World in renewable enegery, Labour in a short sighted move for the immediate populatity of the elite rather than in the long term national interest boosted North Sea oil production to the maximum physically possible and in so doing reduced long term well pressures curtailing future flow rates available to the future generations".

Sun, 2012-09-02 10:47 — matthew fox (not verified)

Inastew, can't you remember your own economic ramblings? One minute you had a two stage plan, 22.5% Vat followed by 25% Vat, why another U-turn?

enegery? populatity? how do override the spelling software on this site?

You strain the forces of logic, reason and spelling.

Sun, 2012-09-02 11:26 — Indu Pendent

We've already had the 20% to 25% VAT rise in stages discussion when you asked the same question and I gave you my answer to do it in stages.

What I propose -- reducing the cost of employing people to create jobs-- is the opposite of Labour, Balls and economic genious Gordon. Your blind support for the "Labour" party elite is absurd.

Sun, 2012-09-02 12:47 — matthew fox (not verified)

I do remember the stages discussion, we had that because until then, you kept changing your story, one minute it was 22.5% then it was going to be 25%, so you concocted a tale of having a two stage vat increase.

Now you reverted to your old ways, talking about a full on 25% rate.

Genious? Do you mean genius?

It seems you are blind to the facts, why is that?

Sat, 2012-09-01 16:01 — Walleyed Mr Whippy (not verified)

A "headache" for Osborne? Come on, don't be so naive, so gullible. Unemployment IS Tory policy. Always has been.

Labour let these wolves into power, and should never be supported again.

Sat, 2012-09-01 17:09 — Steven m (not verified)

So what do you suggest. More of the same old Tory?
You know parties can change and with Labour being in opposition it is a great time to readdress and renew. If they change tact by the time of the next election, then why not support them? If not it only leaves more of Tory rule.

Never say never.

Sat, 2012-09-01 13:33 — Trevor Marwood (not verified)

Part Time Work,Shorter working Week,agency work and Changing legislation to remove those on benefit off the headline figures including useless training courses costing millions.
They all keep the front line figures down,and as usual the media plays the lazy game for the Tory spin.
Its not the first time this as happened in he 1980 the Tories chased everyone they could off the unemployment register including into disability, and we still had 3,500,000 officially out of work.
The reality is we have skilled men who can build Houses,Railways and infrstructure improvements sat on the dole because this pratt who has never done a real job,can carry our his ideological mayhem.

Sat, 2012-09-01 10:02 — Red Rain (not verified)

How many new jobs created under the previous Labour government were taken by foreign born workers?

Under which government did we witness an explosion of job agencies?

Which government willfully neglected our manufacturing industries?

Who was responsible for woefully underfunding our vocational alterative to university?
Some people forget Labour monstrous political errors thankfully most workers don’t…

Sat, 2012-09-01 10:59 — matthew fox (not verified)

" Which government willfully neglected our manufacturing industries"?

Have you any idea of the current state of UK Manufacturing? Would you like a clue, because the current re-balancing of the economy is going pretty badly.

If you swallowed Osborne's guff about the march of the makers, the empty chair you keep talking to, really needs to go Red Pain.

Sat, 2012-09-01 11:59 — Red Rain (not verified)

Do you honestly believe we can keep printing money and carry on borrowing at ever increasing interest rates in order to maintain a bloated public sector? If so you are more deluded than the party you support.

Sat, 2012-09-01 12:50 — matthew fox (not verified)

So you don't want to talk about UK Manufacturing, I am not surprised, not even Clint Eastwood would.

Osborne has agreed to 2 bouts of QE and is on course to borrow £600 Billion. So remind me about your point?

A bloated public sector, really, I see we have too many police, nurses and doctors, is that the problem?

The problem is wasteful spending under this government, eg £250 million aircraft carrier u-turn, a £5 Billion work programme, which has to be justified by highly selective use of data.

Don't forget this government is giving tax cuts to tax cheats, while taking money from 200,000 low income households.

Sun, 2012-09-02 08:49 — skylight

The charge that resonated most with voters was not that Labour was responsible for the recession, but that under Labour, Britain had stopped making things.
When Labour came into government in 1997 manufacturing represented 20.78% of the UK’s GDP. By 2008 this had fallen to 11.99%. In fact in nine out of the eleven Labour years for which figures are now available the value of manufactured goods produced was actually less even in cash terms than the £151.2billion in Labour’s first full year in government. When compared with the 62% rise in GDP as a whole, it is clear that this decline in manufacturing was a real sickness at the heart of our economy.

Sun, 2012-09-02 09:07 — matthew fox (not verified)

Britain stopped making things, because companies shipped production over to Asia.
Why do people blame Labour for the rise of China? Welcome to the wonderful world of Globalisation.

You must understand, Thatcher didn't have to worry about China, she was too busy gutting manufacturing, as my friend made a very good point, when she closed the pits, all the support industries, like manufacturing , suffered.

At the moment, the Right don't want to talk about the current state of UK manufacturing, it is far too painful.

Sun, 2012-09-02 09:59 — skylight

Of course globalisation meant that our ability to compete in low skilled, labour-intensive manufacturing industries was increasingly improbable and undesirable. It never could have been part of a Labour government’s policy to compete in a downward spiral of poorer wages, terms and conditions against the cheap Labour costs of South Korea, China and India. It should certainly have been the Labour government’s policy, however, to create a new generation of higher skilled jobs in electronics, optics, composites, engineering, and renewable technologies much earlier in the employment cycle. Voters in our traditional manufacturing areas could not understand how it was that we were prepared to pour the nation’s wealth into stabilising the banking industry but not willing to do the same for them. They felt let down and betrayed that we, the party of the industrial worker; the party established to protect their interests, had failed even to recognise that they were in trouble until it was too late.

Sun, 2012-09-02 08:43 — skylight

Sat, 2012-09-01 21:14 — Indu Pendent

Matt
Labour shrank UK manufacturing at the fastest rate since the 1970s ... err... when the economy was so pumped up by government wasting it over heated. What they did was ran down UK industry and borrowed vast amounts to grow the non-wealth creating public sector to hide the private sector unemployment they created. Gordon and Ed's so called "no more boom and bust" applying the economic genious of Gordon. Gullable people believe it was not done to win votes and power.

Do you think ordinary Labour party supporters should be ashamed of the elite failing to support Ford to keep Fiesta production in the UK -- they could have kept all those high quality jobs in the UK but -- based on what you said -- were not willing to work with Jack because you said he was a right wing Tory?

Given that you know that Labour boosted North Sea oil production and used more oil revenue (per HMRC facts) than the government before them, do you think Labour squandered the boosted oil takings? e.g. NHS healthcare standards fell behind other countries under Labour and the Labour education legacy is that half of all adults leave state schools without GCSE Maths and Englsh (never mind the Labour spin of 60% pass rate which strategically excludes kids who dont sit the exams and takes credit for private school kids) ... do you support the party's leveling down education philospohy which is designed to stop families getting their bright kids ahead ?

Matt, please could you confirm the total cost of the two redundant Labour aircraft carriers. Was it more than enough pay for the private education for a year of all UK kids under 11?

Matt, what was the cost of each job created under of Labours cancelled work programs? Was it more than the cost of buying businesses employing the same number of people?

Sat, 2012-09-01 21:39 — matthew fox (not verified)

So much written, nothing of note to say.

Just remind me the current state of UK manufacturing Inastew? What happened to an export led recovery, the march of the makers?

Here is a figure to chew on, £600 billion, the amount Gideon will be borrowing up to 2015, with lashing of more borrowing, post 2015.

Did Osborne guarantee the elimination of deficits by 2015?

What is Philsophy? Do you mean Philosophy?

Sat, 2012-09-01 21:57 — Indu Pendent

Matt
Private sector employment is up, public sector employment is down. Labour are so afraid of the public sector paymaster unions even now they are totally unable to discuss the cuts the party would have to make.

£600 Bn is a vast amount (around three quarters of Labours borrowing after inflation). Do you notice that we are openly discussing the figure? It took nearly a year after Labour left power to discover the full extent of what they had done. Why do you think the party went out of its way to conceal the truth?

Osborne set a target to cut the deficit by borrowing £250Bn less than Labour. If the coalition miss its target it will strongly confirm to people that Labour would have been a game over disaster for the UK. Labour are crazy for bashing the Tories for making spending cuts as it will be the top issue at the next election.

So I make typo's. Sorry. Are you going to appologise for getting it wrong for so long with your North Sea oil nonsense?

Sun, 2012-09-02 08:52 — matthew fox (not verified)

I see you don't want to talk about the current state of UK Manufacturing, I am hardly surprised, you probably understand the numbers, I know I do.

£600 Billion is a vast amount, considering all the stealth tax rises, and the rise in VAT.

My North Sea Oil is not nonsense, far from it, considering you just adjusted the £600 Billion with inflation.

Don't you understand the idea the the £12 Billion pounds of North Sea Oil revenues raised in 1984/1985 is worth a whopping £47 Billion in today's money ?

What did happened to all the revenue Inastew? I know it didn't go to pay down the debt, I mean, the National debt increase by £264 Billion circa 1979-1997

Please also remember, in 1997, the tories spent 9p in every pound purely in debt interest repayment. Why did that have to happen Inastew, why did Ken Clarke use nearly 10% of total government spending to just pay off the interest on the credit card. Was this a sign of success?

I will tell you what is nonsense, guessing that Osborne only borrowed £100 Billion in his first year, as opposed to the reality of £150 Billion.

Another piece of bravado from you, was the bad guess that Thatcher and Major only borrowed only £100 Billion circa 1979-1997, another bad guess, wasn't it?

By the way, what is an appologise?

Sun, 2012-09-02 10:46 — Indu Pendent

(adjusting for inflation) - google "sarcastic" to understand my reference.

Why dont you want to talk about the about the total national debt which is predominantly Labour's £600Bn borrowing? For the money we got a vast structural deficit, UK industry run down, an enduring legacy of half of adults let down by state schools who cant read, write and do maths to a basic standard who must compete with better educated people across the world for the same jobs, NHS heathcare standards that fell under Labour relative to other countries not to mention other Labour achievements from their "investment"?

May be I got the figure wrong and it is really nearer to £900Bn? Surely you have been kept informed openly and transparently by your friends? Or perhaps you are doubting their honesty? Perhaps Labour's "investment in public services" was in votes and power for the Labour elite?

What do you thnk economic genious Gordon would recommend? Should we ask your hero Ed Balls?

Sun, 2012-09-02 12:54 — matthew fox (not verified)

Still a no then Inastew, you don't want to talk about UK Manufacturing.

Remind me what Osborne, Howe, Lawson, Major, Lamont and Clarke invested in, I mean apart from all the super North Sea Oil revenues, the receipts from the sale of BP, BT and so on, and the hikes in VAT?

Don't forget, Clarke placed VAT on gas and electricity bills, how did he invest that money, because by 1997, we spent over 9p in every pound, purely on debt interest repayment.

You are my hero inastew, always have been, always will be.

Sat, 2012-09-01 09:27 — matthew fox (not verified)

With Brent crude trading at $114 a barrel, unemployment will be the least of his worries.

Sat, 2012-09-01 19:02 — Gareth

I'm pretty sure the prospect of unemployment is already weighing heavily on the minds of many Tory & Lib Dem MPs...

Sat, 2012-09-01 00:11 — OMfingG (not verified)

What is the point of George Osbourne? even hating him is a waste of time. He is the phantom chancellor, the figment of our imaginations. There may as well just be a pair of frilly knickers in No11 and we can call them the chancellor. All you would have to do is write on them 'I am sticking to the course of fiscal expansionary contraction' and we have everything we need: frilly pants and a moronic policy.

Fri, 2012-08-31 18:54 — kenelmist (not verified)

IDS will complain to the BBC when they report the rising figures.

Fri, 2012-08-31 17:24 — Barrie J (not verified)

Can we stop pretending that the official unemployment figures bear any relation to the number of people out of work and actively seeking employment.
The methods used to measure unemployment have changed so many times (something at the back of my mind tells me in excess of two dozen but I can't find the exact number) that the current statistic is meaningless.
I can't imagine even Gideon and IDS know the actual figure and care even less.