The UK jobless figures for January were published yesterday. Apparently, the UK unemployed rise by 73,800 in January and unemployment now stands at 1.97 million (see report). As we stated in our previous post (see post), whilst this is a tragedy in itself, it is not sufficient to move the total jobless to 3 million in 2009.
We are now seeing that forecasters are starting to express the view that the recession is likely to be longer and deeper than had originally been anticipated. Even the Bank of England gave that warning yesterday (see report). GDP growth is now forecast to contract by 4% between 2008 and 2009 whereas it had previously been forecast to shrink by 3%. It is also forecast that there will be a quick recovery in 2010 - more on that in another post.
One thing that strikes me is that the recession is rather pock-marked in its effect. Retail and wholesale have been badly affected, and this is widespread across the UK. Financial services have been affected, although not as badly as thought, and the impact has been felt in London and South East England. One sector affected heavily is the car manufacturing sector, which is focussed on the West Midlands. Things seem pretty bad there.
In a special report on Newsnight (accessed here), we were able to see just how hard the recession is biting in the West Midlands. As the auto industry is clustered in that region, so is the economic pain. Whilst it is obviously inequitable that the pain is concentrated in one region, it does imply that the regions where the pain isn't being felt so much (such as East Anglia) are doing relatively well.
Finally, the report also highlighted aniother reason why unemployment might not hit 3 million. In this recession, there is a distinct move towards short time working so that employers can retain their skilled production teams. This underemployment does not show up in the official statistics, but it does cause concern that the recovery may, at first, appear to be jobless as the slack of underemployment is taken up.
We still take the view that we are on target for unemployment to reach 2.5 million in 2009 rather than 3 million. Let us hope that we are right and the pessimists are wrong.