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A record number of Britons signed up for jobless benefits last month, putting the country on course for the highest level of unemployment in nearly four decades.

The total jobless figure soared to more than two million in the three months to January — although not all of these were claiming unemployment benefit — marking a return to the level of unemployment recorded when Labour came to power in 1997.

Economists forecast that unemployment could reach 3.3 million next year, higher than the mass unemployment endured under Margaret Thatcher’s Conservative Government in the early 1980s and at any time since comparable records began in the early 1970s.

John Philpot, chief economist at the Chartered Institute of Personnel and Development, said that the country was heading towards the worst outlook for jobs in postwar history. “Full employment is not just slipping away, it is sinking without trace,” he said.

The Government admitted yesterday that it was “dreadfully worried” about workers losing their jobs. Gordon Brown expressed personal regret for everyone made redundant. However, David Cameron, the Conservative leader, attacked the Prime Minister in the Commons for presiding over the biggest increase in the dole queue “since records began” and again urged him to apologise. At one stage Mr Cameron branded Mr Brown a “complete phoney”, but withdrew the remark after a rebuke from Michael Martin, the Speaker.

The Government was further embarrassed after a minister suggested that the “green shoots” of economic recovery will start appearing “before very long” — only hours after the abysmal employment figures, showing that a quarter of a million people were made redundant between November and January, were published by the Office for National Statistics.

Vera Baird, the Solicitor-General, said the Government’s fiscal stimulus package to revive the economy was beginning to work. “One is reasonably confident that there will, before very long, be green shoots,” she told The World at One on BBC Radio 4.

In remarks seen as a rebuff, Mr Brown’s spokesman told reporters who asked for the Prime Minister’s view of her comments: “I think his view is that the Solicitor-General is an excellent lawyer.” The number of people claiming jobless benefit surged by 138,400 in February, the biggest jump since comparable records began in 1971, the ONS said. This pushed the number of claimants to an 11-year high of 1.4 million.

The alternative survey-based measure of unemployment showed that the number of people out of work jumped by 165,000 to 2.03 million in the three months to January.

Howard Archer, chief economist at IHS Global Insight, an economic consultancy, offered little comfort for those hoping for a swift end to the carnage in the jobs market. “Reports of companies laying off workers are prevalent, while an increasing number of companies are folding. 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,” he said.

A key member of the Bank of England’s rate-setting committee issued an even more dire warning, saying that unemployment could reach three million as soon as the end of this year, and rise much higher unless swift action were taken by the Government. “The Government should undertake a substantial fiscal stimulus focused on jobs,” he said.

The British Chambers of Commerce also urged the Government to take more action to stem the rising tide of job losses. David Kern, its chief economist, said: “The outlook for unemployment is worsening and there is an urgent need for action. There is a vital need for steps specifically aimed at preventing a damaging loss in our industrial skills base. Temporary measures such as wage subsidies need to be seriously considered.”

The EEF manufacturing organisation, Corus, the steelmaker, and trade unions have made strong calls for part-wage payments along the lines of schemes that operate in some other European countries.

The Institute of Public Policy Research think-tank said that next month’s Budget needed strong measures to try to help to buoy industry and the economy.

Tony Dolphin, senior economist at the institute, said: “It seems inevitable that unemployment will exceed three million before it peaks in this downturn. The risk of a downward spiral of demand highlights the need for the Chancellor to do more in next month’s budget to boost economic activity.”

There was more grim news for those searching for jobs as the figures showed that vacancies shrank by nearly a third last year. About 482,000 jobs were available in the three months to February, 200,000 fewer than in the same period a year earlier.

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