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Unemployment rises to 1.82 million

Confirmation that the rate of unemployment in the UK is approaching 2 million will be a further reality check to those who assume the economy will bounce back in the short to medium term. So far the unemployment figures have been nominated by the low paid workforce but there are signs that problems are growing in the middle-class of the working public.

If the middle classes are struggling with their employment prospects this could have a serious impact on the government's tax income in the short to medium term. The higher paid taxpayers are central to the government's flow of income tax into the system and if more weakness does evolve in this area this will further squeeze public finances. As we mentioned yesterday, there has been a growing number of "cost cutting programs" in the City and there appears to be more on the horizon.

As the threat of unemployment grows it has the ability to pull more and more people into the social services system, reducing tax income and increasing social service payments. It will also have a major impact on the housing market with many high mortgage homeowners possibly forced to review their situation and maybe downscale.

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