Money guides: unemployment benefit explained

The number of people out of work in Britain was today predicted to rise to 3.3 million by the end of next year, as the Prime Minister admitted that soaring unemployment figures were "a matter of personal regret".

Official figures released this morning showed that the total number of people unemployed, including those not eligible for benefit, had jumped by 165,000 in the quarter to January to hit 2.03 million - the worst figure since 1991, six years before Tony Blair came to power.

Monthly figures for jobseeker’s allowance, meanwhile, showed the largest rise since records began in 1971, with the figure increasing by 138,400 in February - the 13th consecutive rise.

However, City economists issued fresh forecasts today that - with private companies trying to downsize to cut costs in the coming months - unemployment would spiral to about 3.3 million - a level not seen even during the 1980s recession.

"Reports of companies laying off workers are prevalent, while an increasing number of companies are folding," Howard Archer, chief economist at IHS Global Insight, said.

"With the economy seemingly set to contract through 2009 and very possibly beyond before starting to recover gradually, we expect unemployment to rise to a peak of 3.3 million late next year or early 2011."

On the back of the bleak figures, sterling fell to a fresh seven-week low against the euro of 93.96p, while the pound hit a session low against the dollar at $1.3848.

Gordon Brown told the weekly Question Time session in the Commons that the Government was doing "everything we can" to help people back to work, claiming that more apprenticeships were being developed, more help was being given with training and more money being put into jobcentres.

"Any person losing their job, or in fear of losing their job, is a matter of personal regret for me and for the whole Government," Mr Brown said, in response to a question by his Labour colleague Jim Sheridan.

However, during a furious exchange, David Cameron accused Mr Brown of being "in denial" over the scale of the recession and called on him to apologise.

"He has led us to this point without the hint of an apology and the British people will never forget it," the Conservative leader said.

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