Thursday, 18 March 2010

Unemployment falls but UK could be on verge of Public Sector Recession

By Sunil Patel.

The unemployment figures show the UK is on the edge of public sector recession with the biggest cuts to spending in a generation, according to KPMG.

The overall unemployment rate remained the same as the previous quarter at 7.8 per cent of the UK employment population.

However there was a 3,000 fall in figures for total unemployment - down to 2.46 million over the quarter - according to the Office for National Statistics (ONS).

The number of people claiming Jobseekers allowance in January still rose by 23,500 over the same period to 1.64 million.

The numbers of people who have been jobless for more than 12 months increased by 37,000 over the three month period to 663,000 a thirteen year high.

The ONS figures show the public sector remains a significant employer of the UK’s workforce, with the number people employed up by 23,000 to 6.09 million between June and September 2009.

However for the public sector, the recession may be about to begin, with many authorities facing the prospect of unprecedented funding cuts as the government attempts to reign in the massive £178 billion public deficit.

With one in three public sector employers aiming significant cuts to staff levels, according to a report published by the (CIPD) Chartered Institute of Personnel and Development and KPMG.

It is expected, the government will delay unpopular public funding cuts until after this summer’s general election.

So far the government has only signalled an intention to ring-fence health, education and defence budgets.

Alan Downey, head of public sector at KPMG, said, “These figures clearly show that the starting gun for a public-sector recession has been fired.

"It is only a matter of time before we are faced with the deepest and most prolonged cuts in public expenditure that anyone can remember.”

Local councils, across the UK, could see spending cuts of up to 20 percent in real terms starting from 2011-2014, according to a Local Government Association spokesman.

He said, “UK plc is very heavily public sector based so there is a very real chance of a double-dip recession.”

And Police Forces in the UK are also expected to face similar levels of spending cuts of around 10 to 20 percent over the next few years, Sir Hugh Orde, leader of the chief constables in England and Wales said in November.

An ACPO spokesman said, “All forces are facing substantial challenges to balance funding for effective service delivery.

“The police service is committed to making substantial efficiency savings while at the same time protecting frontline service delivery. Substantial reductions in officer numbers would be a measure of last resort.”

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