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Alistair Darling admits unemployment will rise further

In a serious blast of reality for those looking at the UK economy through "rose tinted glasses" even Alistair Darling has admitted that unemployment is set to increase for some time yet. Unemployment hit 2.2 million last month which is the highest level since Labour came to power in 1997 although many believe this could be just the tip of the iceberg.

While Alistair Darling was unwilling to put forward a forecast for the unemployment figure over the next few years, many believe the 3 million barrier will be broken in the short term with the more gloomy forecasts looking towards a figure of 3.4 million unemployed before the number starts to fall back. Not only will it place significant pressure on the everyday costs of living for many across the UK but it will also reduce the UK government's tax income for some time to come and place more pressure on the social security budget.

There is very little that the UK authorities can do in the short to medium term with regards to unemployment as this figure has historically lagged any recovery in the UK economy and looks set to do so again. Whether the figure will fall substantially once it turns remains to be seen as more and more businesses will be under more and more pressure from their banks to reduce their costs in the short to medium term.

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