Government spending cuts will push UK unemployment up from its current 2.5m to almost 3m, a report has warned. Deficit reduction would also stall recovery in the jobs market, employment group the Chartered Institute of Personnel and Development (CIPD) said. There was little prospect of real wage growth until at least 2015, and public sector workers faced pay cuts, it said. The chancellor is expected to lay out sweeping cuts to try to trim the £156bn deficit in his budget on 22 June.
The business group the CBI has called for £4 in spending cuts for every £1 in tax hikes. It warned that public finances should be repaired without damaging growth prospects, calling for a shake-up of public services provision to save money through job cuts and sharing back office functions. "A radical re-engineering of public services is a must if damaging tax rises are to be avoided. Only an effective cost reduction strategy can safeguard future growth," CBI deputy director-general John Cridland said.
The CIPD had earlier suggested that the jobless total would reach 2.65 million this year. But chief economic adviser John Philpott said he had now revised up his forecast, saying unemployment would climb to 2.95m in the second half of 2012, and remain close to that level until 2015. About 500,000 public sector jobs would go in that period, Mr Philpott predicted.
Unemployment is currently 2.51m, according to the latest official figures.
