Independent UK: As the number of jobless soars collapsing confidence will create vicious circle

[marmar]

Sean O'Grady: As the number of jobless continues to soar collapsing confidence will create vicious circle

Thursday, 12 February 2009


Even though yesterday's unemployment figure didn't burst through the two million mark, as many expected, there is little comfort in that. For there is little doubt that it will do so the next time the numbers are published. What's more it seems a racing certainty that the dole queues will lengthen to three million by the end of this year. Unemployment tends to lag behind the economy's fortunes, so the jobless numbers will not decline significantly until the economic recovery is well under way – which could take many years.

The consequences for some families will be shattering. It will mean the loss not only of their main income but also the roof over their heads and the burden of negative equity, if they avoid bankruptcy. A number of charities have predicted a steep rise in marriage break-ups as the recession bites deeper and the Home Office and the Financial Services Authority fear a wave of fraud and other crimes on the back of the biggest dole queues since the 1980s. Some wonder about political extremism and social unrest.

These figures are grim because of what they tell us about the underlying trend. Analysis by Citi Group economists tells us that the jobless total has risen by nearly 400,000 people since the recession got underway last autumn – a slightly faster pace than in any of the three big post-war recessions.

In a way, this recession seems to combine all the worst aspects of the previous three downturns. We had the same huge increase in the oil price that we suffered in the early-to-mid 1970s (although that has rapidly disappeared); the same hit to manufacturing seen in the Thatcher-inspired "shakeout" of the early 1980s, which hit the North especially badly; and the same national housing crash we saw in the early 1990s. Plus, of course, a restriction in bank lending that has not really been seen since the early 1930s. Quite a cocktail. ..........(more)

The complete piece is at: http://www.independent.co.uk/opinion/commentators/sean-ogrady-as-the-number-of-jobless-continues-to-soar-collapsing-confidence-will-create-vicious-circle-1607239.html

[liberal N proud]

1. I keep getting this image when I think about the economy...

[PM Martin]

2. Welcome to the deflation sprial

:scared:

[xchrom]

3. this bears repeating.

'A number of charities have predicted a steep rise in marriage break-ups as the recession bites deeper and the Home Office and the Financial Services Authority fear a wave of fraud and other crimes on the back of the biggest dole queues since the 1980s. Some wonder about political extremism and social unrest. '