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Thursday, 12th February 2009

The unemployment ahead

Fraser Nelson 9:04am

How high will unemployment get? In his interview with me in today's Spectator (an extended, web version here) Alan Johnson says - towards the end - that we'd best prepare for two years of downturn. He was being optimistic. During the last three recessions (mid-70s, early 80s, early 90s) it took three years for the unemployment to peak - and there is every chance that it will keep rising in Britain until 2011. The below graph, from Citi, certainly chimes with the Balls analysis of this being the worst recession for a century. It looks like we'll get ILO unemployment from today's 1.9m to about 3.4m - which will make about  6.5m on benefits in total. Imagine the bill this will present to Cameron: between a fifth and a quarter of the entire British workforce on the dole. And this is why urgent welfare reform is needed. We simply won't be able to afford the status quo:


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Ian C

February 12th, 2009 10:12am Report this comment

We can take the 'rabbit in the headlights' route out of this by taxing and spending in support of the 6.5m followed by decades of stagnation and hurried slide down the international league of wealthy nations, or we can set the entrepreneurial spirit free by dropping taxes and reforming and reducing radically the benefit system.

If that means 'soup kitchen' welfare for a few years then that is the price of putting Britain back on the road to sustainable prosperity for all which needs the removal of the dead weight of benefits culture that we could never afford but now can no longer pay for either.

Prodicus

February 12th, 2009 10:34am Report this comment

Let's write that 2011 PMQ now, shall we?

'Mr Speaker, will the PM acknowledge that, after two full years in government, his iniquitous Tory policies are yet again doing terrible damage to the golden economic legacy left in place by my Right Honourable Friend the member for ... where was it again... and ruining the lives of millions of hardworking /Scottish/ British familes? Same old Tory toffs, same old unemployment!' (Uproar. Rt Hon and Hon Members wave order papers, cries of 'Resign!', 'Toffs!', 'Bring back Tony!', 'Get up them stairs, etc.)

True Bred Pomponian

February 12th, 2009 11:00am Report this comment

And don't forget the 7 million public sector employees - there is no danger of any of them forming part of the 6.5 million. Making 13.5 milion in all being funded by the handful of people left working in the private sector.

Rhoda Klapp

February 12th, 2009 11:53am Report this comment

It's too late for meaningful welfare reform. You can't bully (or even tempt) people into jobs when there are no jobs. Maybe you could get some immigrants to leave but that's doubtful.

So job creation is the priority. Government is not much good at that, except as public sector jobs which are no more than dole with a better pension.

To make the private sector employ in current conditions is not easy. As a minimum, scrap the regulations which put employers off. I've occasionally wondered whether a two-tier job market could be tried. One option 'with rights', as today, all protections in force, and another 'without rights', no rules, pay and holidays as negotiated, nothing else unless agreed. The EU won't let us? What's that town in the Bible, next to Gomorrah?

Wily Trout

February 12th, 2009 3:31pm Report this comment

Please could the unemployment figures increase by ONE very soon?

Hysteria

February 12th, 2009 4:18pm Report this comment

something about keeping people in their homes is going to be important - if we can do this then perhaps the "soup kitchen" or "pioneer workers" approach may work -

need to massively reduce taxes on business to encourage wealth creation.

True Bred makes a great point - it is not the unemployed headline number that is important here - it is the ratio of people receiving tax funding to those not receiving tax funding that is key.

(I accept that many public sector workers "add value" if you cast a reasonable net)

CCTV

February 12th, 2009 4:29pm Report this comment

So long as Britain offers a better base than elsewhere in the EU it will attract many of the 500 million entitled to work here and claim benefit so don't count on reducing claimant count

jim

February 14th, 2009 2:24pm Report this comment

I'm afraid it will be higher than 25%. It really is time for people to stop living in denial. We are about to experience economic collapse, 50% is more likely.

Stuart

February 16th, 2009 12:43pm Report this comment

Give the B of E back its role of complete independence. Staff it with experienced `hands-on` economists and businessmen. Reduce the taxes across the spectrum. Financially help manufacturing industry - tighten up Trades Union law ( they helped to wreck the British Manufacturing base in the 60/70`s ). Cut out the welfare culture. Appoint a Chancellor with fiscal experience. Restore pride in the country. Leave the EU which will bring this nation to its knees before long - re-organise the NHS ( for the last time)which is an albatross and will bankrupt this nation if not controlled. It is too large.

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