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How will the economy cope with rising unemployment?

Today's announcement that UK unemployment has reached 2.38 million was something of a surprise to the vast majority of economists and analysts in the UK. A figure of 2.24 million had been pencilled in by many although at the end of the day the forecast rise of 140,000 was actually double at just over 280,000. So what next for the UK economy?

While this obviously places more pressure on the UK governments social security system there are more far-reaching implications for the overall UK economy. The more unemployed in UK the less funding available and ultimately less money will be spent on the high street. There are also implications for the UK property market where first-time buyers may well hold back if they are concerned about their short-term job prospects which could see prices stabilise at best and potentially consolidate at lower levels.

However the subject of consumer and business confidence in the UK is one which is often overlooked although ultimately it is an improvement in confidence which will drive the economy forward. The doom and gloom of more job losses in the media and hard-hitting headlines in newspapers will certainly not inspire confidence in the short to medium term.

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