Addressing parliament today, Chancellor Alistair Darling warned that UK unemployment would continue to rise “for a while”.
The latest official figures show that UK unemployment stands at 2.46 million - a rate of 7.8%.
The Organisation for Economic Co-operation recently forecast that UK unemployment will increase to a rate of 9.3% in 2010 and to 9.5% the year after.
Mr Darling said unemployment was “too high” but argued that the situation could be worse: “Because our labour market has been more flexible than in the past, although unemployment in this country is too high and unfortunately will continue to rise for a while, it is lower than in other countries,” he said.
The Office for National Statistics (ONS) yesterday revealed that the UK economy contracted by 0.3% in the July to September period - rather than the 0.4% previously estimated.
The UK has been lagging behind other economies and is now the last major economy that is still in recession.
It is hoped that the UK will emerge from recession in the fourth quarter but many economists have also cautioned that unemployment could continue to rise in the aftermath of the recession.
However, on a more positive note, today the CBI said retail sales rose at their fastest pace in two years in November.
According to the CBI’s monthly distributive trades survey, retailers expect a further rise in December, boosting hopes of a busy Christmas shopping period on the High Street.
Commenting on today’s retail figures, Howard Archer, chief UK and European economist for IHS Global Insight, said: “Consumers are still keen to limit their expenditure as concerns about the economy and their jobs have far from disappeared.
“There is also a widespread need for consumers to improve their personal finances and credit conditions facing consumers are still tight,” he added.
In other news, bookshop chain Borders UK was placed into administration today.
The 45-store book retailer does not have sufficient cash to see it through to Christmas as it has suffered amid increased competition from supermarkets and online retailers, such as Amazon.
More than 1,000 jobs are at risk as a result of the administration.
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