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As the jobs continue to go, the crime wave will grow

Rising unemployment and policing cuts will see a new wave of crime hitting our streets.

Crime rates in the UK have fallen sharply over the past decade or so, but these advances are likely to be reversed by the rise in unemployment and the reckless cuts to policing that are on the way.

As unemployment rates rise, so do crime rates, especially property crime. High levels of youth unemployment are a particular problem, as young people tend disproportionately to commit crime. Research evidence suggests that both youth and adult unemployment rates in Britain are significantly and positively related to burglary, theft, fraud and forgery. For each of these offences, however, the relationship with youth unemployment was found to be somewhat stronger.

The first signs of a growing crime wave were published by the Metropolitan Police at the end of June. The figures showed that both robberies against the person and residential burglaries in London were up just over 18 per cent in May on the same month last year. In the three-month period from March to May this year, thefts from the person, such as pickpocketing, rose by 11.2 per cent. I expect the crime figures to worsen across the country, especially if there are an additional 40,000 homeless as a result of benefit reforms. This is just the start.

Desperate measures

The Work and Pensions Secretary, Iain Duncan Smith, is clearly in trouble on youth unemployment if all he can do is blame immigrants for taking British jobs and plead with businesses to hire youngsters. These are the last resorts of a minister with no policy. The untested and untried (There Is No) Work Programme being introduced by IDS is heading for failure, because there simply are not enough jobs to go around. For every registered vacancy, there are ten people who would like a job -- and that figure is set to rise.

Over the last two quarters for which we have data -- the fourth quarter of 2010 and the first of 2011 -- employment among people born in the UK collapsed. According to official data released by the Office for National Statistics on 15 June, employment of the "UK born" increased by 380,000 between the first and third quarters of 2010, when Labour was still in power, and over the same period employment of the "non-UK born" rose by just under 200,000.

In the subsequent two quarters, under the coalition government, employment of the UK born fell by 300,000 and employment of the non-UK born rose by 140,000. On Duncan Smith's watch, therefore, the number of jobs held by people born in the UK is falling while the number held by people born outside the UK is rising. I guess his Tory backbenchers and the Daily Mail will be none too pleased.

Chancellor George Osborne is also in trouble, as consumer confidence continues to fall. The GfK NOP consumer confidence index dropped 4 points in June to -25, all five of its measures showing a decline. Across the board, "confidence is lower than it was this time last year", according to the managing director of GfK NOP Social Research, Nick Moon. "As we move into the summer, the outlook for the beleaguered high street remains a gloomy one."


Osborne's big hope had been that the manufacturing sector would pick up the slack and allow the economy to rebalance away from its
dependence on financial services, government and construction. The idea was that the low exchange rate would give a boost to exports and reduce imports because foreign goods are more expensive. But 1 July's Markit/CIPS manufacturing purchasing managers' index (PMI) for the UK suggested that orders had declined and job growth slowed sharply.

At 51.3 in June, down from a revised reading of 52 in May, the index fell to its lowest level since September 2009. For the second quarter of 2011 as a whole, the average PMI reading of 52.6 is likewise the lowest since the recovery began, and well below the 59.8 posted for the opening quarter of this year. The PMIs for manufacturing, services and construction suggest that growth in the second quarter will be 0.3 per cent or lower, down from 0.5 per cent in the first quarter.

There was also a broad-based slowdown in eurozone manufacturing PMIs. Contraction was seen in Italy, Spain, Greece and Ireland. Germany and Austria hit 17-month lows in growth, the Netherlands a 20-month low and France a 22-month low. Markit's chief economist, Chris Williamson, said that slumping consumer demand in critical eurozone export markets and the US, together with policy tightening in China and other emerging markets, are "likely to continue to act as major counteracting drags on demand for UK exports".

Exports from the UK will suffer a further hit if -- or, more likely, when -- the European Central Bank raises interest rates again on 7 July, even though inflation in the eurozone is only 2.7 per cent and falling, while unemployment is at 9.9 per cent and rising. Unemployment is already 21 per cent in Spain, 15 per cent in Greece, 14 per cent in Ireland and 12 per cent in Portugal; higher interest rates will bring these countries closer to default. Indeed, Standard & Poor's suggested that plans by Germany and France to allow Greece to defer repayment of its debt could mean it had already defaulted.

Figures published by Eurostat on 5 July showed that the volume of retail trade collapsed by 1.1 per cent over the past month in both the euro area and the EU. Sales fell by 3.7 per cent in Denmark, 2.8 per cent in Germany, 3.1 per cent in Portugal and 1.3 per cent in the UK.

Loss of trust

An ICM poll published on 3 July found that 66 per cent of the public think the economy is getting worse, while 52 per cent think David Cameron and George Osborne are doing "a bad job" with the economy. Thirty-eight per cent said they could not imagine ever having the money they wanted to meet their needs, while 52 per cent said they had less hope for the future and felt much poorer than they did two years ago. About four-fifths had given up buying perceived luxury items, such as new furniture and cars, but that rose to almost 90 per cent among respondents aged between 18 and 44.

In a YouGov poll taken on 3 and 4 July, 56 per cent of respondents said they "disapproved of the government's record to date". As Nick Clegg said in recent days, "Once you lose the trust of the British people on the economy, you are in very, very serious trouble indeed." They have, and we are.

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