Sunday, May 3, 2009

Jobless hits 2.1m as public debt soars to £90bn


Jobless hits 2.1m as public debt soars to £90bn

Grainne Gilmore and Elizabeth Judge

Public borrowing has soared to a record £90 billion in the past financial year and unemployment reached the highest level since Labour came to power in 1997, piling pressure on Alistair Darling on the day he unveiled one of the most important Budgets in decades.

The misery for workers was also underlined as private sector wages fell for the first time in nearly 20 years in the three months to February, official figures show.

Net borrowing for March hit £19.1 billion, the highest level for a single month since records began in 1993, the Office for National Statistics (ONS) said.

Borrowing for the year was £55.3 billion more than last year, smashing the Treasury's own forecast of £78 billion.

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The Chancellor was expected to reveal today that public borrowing would reach £170 billion between 2009 and 2010, a rise from the £118 billion figure projected in the Pre-Budget Report in November.

At the same time, data showed that the number of people out of work rose by 177,000 to 2.1 million in the three months to February, the highest number since Labour was elected 12 years ago.

Mr Darling had prepared to outline a "Budget for jobs", including a £2.5 billion package to guarantee work or training for every young person out of work for more than a year.

The number of people claiming benefits rose by 73,700 to 1.46 million in March.

The increase is more modest than in February, when the number of people claiming jobseekers' allowance rose by a record 138,400 to 1.4 million.

But the increased pressure on paypackets, and especially bonus payments, was further illustrated as annual earnings growth fell to only 0.1 per cent in the three months to February, the lowest growth recorded, down from 1.7 per cent in the three months to January.

Private sector pay, including bonuses, fell by 0.5 per cent, the first annual drop recorded since March 1991.

Overall, public debt reached £743.6 billion by the end of March 2009 – equal to a staggering 50.9 per cent of GDP, up from 43.1 per cent at the end of March last year.

Excluding the billions of taxpayers' funds that the Government has sunk into bailing out banks, the net dent is 41.7 per cent of GDP, which still breaks the Government's now defunct fiscal rules; these included a pledge that debt would never exceed 40 per cent of GDP in the economic cycle.

Mr Darling was expected to say today that the final bill for rescuing British banks will reach £60 billion.

The International Monetary Fund was forced into an embarrassing climbdown by the Treasury last night after it claimed that the rescue would cost the UK £200 billion, a figure that it had revised upwards from an earlier forecast of £130 billion.

Posted by TheOneAll at 8:38 PM
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