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UK unemployment forecast shattered

The Chartered Institute of Personnel and Development has today shattered the UK government's forecast that unemployment will peak at 2.5 million, or 8.1% of the workforce, before falling back to 6.1% by 2015. The institute believes that UK unemployment will peak at 3 million by 2012, 9.5% of the workforce, before falling back to 8% in 2015. So how does this leave the UK government with regards to UK finances?

There is no doubt that the more people unemployed the more pressure this will place upon the benefits system and the less income the UK government will have from taxes and other income streams. This also calls into question the independence of the Office for Budget Responsibility which issued the official estimate that the UK government used in its calculations for tax income going forward.

Ironically, today's employment data is set to show a fall to 2.47 million in May although we have yet to see the slash and burn tactics with regards to the public sector come into play. There is still some debate as to how many public sector service jobs will be lost in the years to come with the UK government adamant that any shortfall will be made up by the private sector. Whether this will be the case, remains to be seen.

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