Unemployment falls in boost for coalition

Unemployment is down, but experts say consumer spending will remain shaky
Unemployment is down, but experts say consumer spending will remain shaky

By politics.co.uk staff

A second consecutive quarterly drop in unemployment will be welcomed by ministers in Whitehall.

Official figures showed unemployment fell in the first quarter of 2011 by 36,000, to 2.46 million.

But the number of people claiming jobseeker's allowance increased in April by 12,400 to 1.47 million.

Unemployment now stands at 7.7%, with an extra 118,000 people in employment.

The improving labour market reflects the improving mood among business surveys and evidence from recruitment consultancies, Markit's chief economist Chris Williamson said.

Shadow chancellor Ed Balls said today's figures are "a sign we are not out of the woods by a long stretch".

"Most right-thinking people think the government need to do more. Not least because failing to get Britain back to work fast enough is pushing up the welfare bill by 12.5 billion - that's £500 per household. That is simply irresponsible economics," Mr Balls commented.

"Getting people off benefits and into work paying taxes is vital to get the deficit down. The government are now having to borrow £46 billion more than planned. It's a vicious circle and makes no economic sense at all."

"Perhaps the most telling gauge of the labour market's health, however, is pay growth, which remains very weak," he said.

"This reflects widespread job insecurity as employees worry about the uncertain economic outlook. The underlying annual rate of pay growth (excluding bonuses) fell from 2.2% to just 2.1%, while headline pay growth was just 2.3%. That was up from two per cent but still very weak by historical standards."

Consumer spending could be stifled as a result in a trend which could be a feature of the economy for some time, he added.

Latest figures on quarterly GDP showed the economy returned to growth in the first three months of the year, at 0.5%. That suggested broad stagnation over the last nine months, however.


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