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By Lee Wild

Date: Wednesday 15 Oct 2008

LONDON (ShareCast) - The number of jobless Britons soared by 164,000 in the three months to August to 1.79m, the largest increase since the middle of 1991.

Almost 940,000 were claiming Jobseekers Allowance in September, 31,800 more than the month before and 104,900 more than a year ago, according to the Office for National Statistics. The claimant count has now risen eighth months in a row.

“Claimant count unemployment seems poised to move above 1 million in November and we expect it to climb markedly higher through 2009,” said Howard Archer, chief UK economist at Global Insight. “Indeed, it could well reach 2 million in 2010.”

Unemployment now stands at 5.7% for the three month period, half a per cent more than the last quarter, while a 122,000 drop in employment to 29.42m was the worst since early 1993.

“These figures come as no surprise and are only likely to get worse over the coming months,” said Liberal Democrat Shadow Work and Pensions Secretary, Jenny Willott. “The effects of the banking crisis have filtered down to the real economy and are affecting people across the county.”

Last month, the CBI warned that over 2m people will be on the dole by the end of next year as Britain sinks into a “shallow” recession during the second half of 2008.

Unemployment is expected to reach 2.01m in 2009, while the jobless rate is forecast to hit 6.5%, said the business body.

Today's report showed employers are taking on less staff, with job vacancies falling by 40,000 in the three months to September to 608,000. There are 62,000 less than a year ago.

Vacancies in the distribution, hotels and restaurants industry tumbled by 17,000 during the quarter and by 10,000 in finance and business services.

Tough economic conditions and a looming recession are forcing more firms to lay people off, sending redundancies up by 28,000 to 147,000.

But a 0.1% slowdown in average earnings growth during the quarter to 3.4%, the weakest rate in five years, could convince the Bank of England it’s safe to cut rates again soon.

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