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The number of people of out of work rose by 81,000 to a nine-year high in August as the rate of Britons claiming unemployment benefits surged at the fastest rate since the UK's last recession.
Some 32,500 people signed on for jobless benefits during August, official figures showed today, signalling the largest increase since 1992.
Unemployment also rose, reaching 1.72 million people but business organisations said numbers could rise as high as two million by the end of next year to levels not seen since Labour came to power in 1997.
The CBI, the employers' group, said that the number of people out of work could rise by 450,000 by the end of the next year, while the Trades Union Congress said that the number of people out of work for more than a year could surge by 700,000.
Today's figures will add to Prime Minister Gordon Brown's mounting problems as he grapples to maintain control after a second minister quit yesterday while battling to keep a grip on Britain's slowing economy.
Figures also showed today that number of people in employment also fell for the first time in nearly two years as the deteriorating economic conditions took their toll.
Earlier this week 5,000 City workers lost their jobs as Lehman Brothers, once America's fourth largest investment bank, filed for bankruptcy.
Howard Archer, chief UK and of Global Insight, the economic consultancy, said: "It seems inevitable that very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market over the coming months."
The rise in both unemployment and benefit claimants will come as disturbing news for the Bank of England, which is hampered from cutting interest rates to shore up the economy by soaring inflation, which rose to a 16-year high of 4.7 per cent last month.
The increasing number of people losing their jobs will also raise fears over the future of house prices, which have tumbled by more than 10 per cent since last summer, according to Halifax.
People who can no longer keep up with their mortgage repayments will be forced to accept low offers for their property, dragging house prices down further.
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Here's the new phrase Housing CRUNCH. The toxic conditions now at play will push those who remortgaged early in the year to the edge. Jobs go and reposessions fly. Remortgage money runs dry and distressed sales turn into reposessions over night. Auctions will not be able to clear the huge stock.
Nick Garrett, piacenza, Italy
This credit crunch as it is ,is not a "natural" crunch I suspect it is a form of terrorism On the major Fin hubs of the world .this is done by a group of ppl or i would say a mass of ppl who want to terrorise the people.these people i would say have very good understanding of the flaw of marke
Baily, London , United kingdom
Yes unemployment continues to rise, Population continues to rise, money supply continues to fall, wealth continues to fall
won't be long before UK becomes a third world member.
continue the reckless policies of immigration and sponsoring childbirth, and we will arrive there even faster
nazb, Peterborough, Uk
rather than pay the unemployed a fixed amount every month, why not cap the amount over each decade. thus the short-tern unlucky will get a living wage, and the long-term spongers will get the kick up the behind they so badly need
frank, swindon, uk
Nick, Birmingham - We are told that 1.7 million are officially unemployed and yet there are only 600k jobs available, and the UK is heading for a recession. The NMW and uncontrolled immigration have not helped. And not everybody unemployed is lazy; some of us DO want to work!
Paul, West Midlands,
The US Postal Service was privatized some time ago. (I think it worked better before, but that's not entirely relevant.)
Priscilla, NY, London,
Marion. We in Canada are also used to "ridiculous government interference"...Canada Post...Air Canada, and various grain and poultry marketing boards. As for the USA....spell...."Homeland Security". Government intervention is a favorite crutch of the masses.,regardless of the country.
Austin Peckham, Victoria,BC, Canada
O.K. so if unemployement is 1.7 million and population is estimated 62 million that makes 2.8% of the population out of work, which doesn't seem too desperate, i think people may have to tighten their belts for a while but the cost of housing and immigration are much more pressing issues.
Toby, cambridge, england
O.K. so if unemployment is 1.7 million and population is estimated 62 million that makes 2.8% of the population out of work, which doesn't seem too desperate, i think people may have to tighten their belts for a while but the cost of housing and immigration are much more pressing issues.
Toby, cambridge, england
the lack of restrictions on the amount of european workers is now biting more than ever,this was always going to happen it was just a question of when!!
michael cardwell, blackpool , uk
It was Gorden Brown who changed the state benefits to help with mortgage payments, these used to keep people afloat for a while -no more benefits are not payable until 39 weeks, repossesions happen before this, how come the media have not picked this up?
Shirley , Soton, UK
i agree with you rachel, i have too just been made redundant!! - Want to lend us some cash so we dont have to claim the dole NIck???..... no i didnt think you would!
Charlene, London, uk
Although I completely understood Sebastian's comment, it does seem utterly pointless. How do you manage to feed, clothe and house yourself without money? With obvious access to a computer, somebody must be paying...
Richard, Marlow, UK
Get real Nick. I've just been made redundant and despite looking for work may well be on benefit by the end of next month, for the first time in my life. I can't see how I will pay my rent and bills, I already do not have my heating on as it is too expensive. Lucky you that you can have that opinion
Rachel Bochenski, Chester, UK
Marion, have you looked at what is happening in your own country? I remember the days when the US was a free market economy. I believe you still have a national postal service?
Carsten, London, UK
Is Labour going to employ all these people in the public sector or do we start to see tax cuts to make us more competative as country. Before Labour came to power we were the 4th richest country now we are the 5th. Who knows what we will be after this mess?
steve tea, manchester, cheshire
I am from the USA, but I spend lots of time in England. I have never seen such ridiculous government interference in business and in people's lives. I am not one bit surprised that unemployment continues to rise--government, get OUT of the way of the free market!
Marion, Ft. Worth, TX, USA
The article should have been: "UK laziness rises to nine-year high". Cut the unemployment benefits and you will be surprised to see that the unemployment in UK will be one of the lowest around the world........
Nick, Birmingham,
There is no Act of Parliament which sets out in express terms that they [the people] must work for if there was such an Act it would amount to a collective subjugation of the human person to compulsory labour. There is also no Act of Parliament which sets out in express terms that it is compulsory for every living person to have or not to have money. Neither can this phenomenon be interpreted as an implied term because implied terms always refer to the express terms found somewhere in Statute. So why bother to work or to have money if the law does not say that every person MUST have money?
Sebastian Kornhauser , London , United Kingdom