Unemployment rise could cause ‘perfect storm’
Feb 17 2011
A weakening jobs market could make for a ‘perfect storm’ for the economy
A senior economist has predicted further increases in unemployment throughout the remainder of 2011.
Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development (CIPD), foresees a ‘job-loss recovery’ this year, a form of economic growth in which the total number of jobs in the economy decreases.
Says Philpott, ‘It is encouraging that the number of people being made redundant stabilised around the turn of the year and that the number of job vacancies increased slightly. However, forward-looking survey indicators suggest that redundancies are now on the rise, especially in the public sector, while recruitment is easing across most sectors.’
Philpott adds that this weakening jobs market, together with muted economic growth, a tight fiscal policy and above-target inflation could add up to a ‘perfect storm’ for the economy.
He continues, ‘As he faces into this gathering storm, the Chancellor must plan next month’s budget. It will be crucial for the job market that he succeeds in delivering the planned “budget for growth” at a time of great austerity. If he finds this an impossible task, he may yet have to reach for a fiscal Plan B.’
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