Engine maker Rolls Royce (RR.L) said today it would build or extend four factories in Britain and open a new plant in Singapore, creating new jobs in both countries.
The British company plans to invest over 300 million pounds ($712 million) in the UK where unemployment is running at the highest rate in 12 years. The government will contribute 45 million pounds towards the projects which are expected to create or secure 800 jobs.
Citigroup is projecting that unemployment in Spain will rise from its current 17.9% to 22% next year.Spain’s unemployment is largely driven by the bursting of its housing bubble.As I wrote last December:Housing bubbles are now bursting in China, France…
The unemployment rate in the Chicago metropolitan area continued to surge in June, reaching 11.3 percent, up from 6.9 percent a year earlier and the highest level since July of 1983, the Illinois Department of Employment Security said Thursday…
Fiscal policy defended as new figures suggest government has actually prevented large rises in unemployment
Gordon Brown departed for his summer holiday today predicting that Britain may be able to avoid the large rises in unemployment that are likely to take place elsewhere in the world and has already prevented 500,000 people joining the dole queues.
Speaking at his closing press conference of the political season, the prime minister suggested that the government’s interventions on fiscal policy had helped slow the pace of rising unemployment.
No 10 is understood to be looking internally at charts suggesting that the Job Seeker’s Allowance count could hit a peak 500,000 lower than the Treasury had previously thought, saving as much as £2bn in benefit costs.
In the budget, the Treasury used an average of city forecasters to predict the unemployment claimant count would “rise from … 1.39m to 2.09m at the end of 2009, and to 2.44m at the end of 2010″.
Although economic growth is thought to have been worse than the Treasury predicted in the spring, the latest figures from the Office of National Statistics show the claimant count in June had risen to 1.56m, an increase of only 23,000 on the previous month, compared to monthly increases of 80,00 per month at the start of the year.
At his Downing Street press conference, Brown insisted he was not making predictions about unemployment, but noted that even last month 300,000 people had left the claimant register suggesting it was still possible to find work.
He added: “I think as people look at the situation in the next few months they will find unemployment rising very fast in other countries. The question is whether we can prevent unemployment rising as fast. If we had not acted, and taken the fiscal policy decisions we have, unemployment would be higher.”
Experts are so puzzled by the low claimant count, and its divergence from the Labour Force Survey figures showing unemployment at the much higher figure of 2.38m, that they have called for the Department for Work and Pensions to conduct a brief inquiry.
John Philpott, chief economist at the Chartered Institute for Personnel Development, said the size of the gap between the two figures of 800,000 warranted an explanation.
He said: “It could be that the government’s employment measures are having an effect or that the middle class do not want the hassle of signing on, or the poor think the regime is too tough, or that migrants are not allowed to claim. We do not know. The levels of inflow are going down and the levels of outflow are going up. Yet redundancies are at 300,000 a month, and there are vacancies of 250,000 – that would suggest the claimant count would be higher.
“If you had asked me three months ago I would have thought the claimant count would rising now by 100,000 a month, but it is now just as likely we will see the numbers rise slowly.”
Brown was careful not to say that the recession was coming to an end, and repeatedly said he was not going to be complacent. But ministers are desperately hoping that the figures are revealing the economy as stronger than expected.
Normally, unemployment is a lagging indicator, suggesting the unemployment rate could be close to 3m at the time of the general election next spring. But there is uncertainty inside Downing Street. Brown insisted: “If we had not intervened and acted decisively at least further 500,000 jobs would have been lost in this recession.”
He also argued the political debate should be turning on “the here and now question” of whether the government had been right to take the fiscal action it had, rather than debating how much spending will have to be reined in after the election.
He insisted his was the first government to introduce a debt reduction programme, pointing to the budget’s plan to raise taxes for high earners and to find £30bn in efficiency savings.
Without citing a source, he said: “Because of the action we have already taken our debt in most of the years ahead will be less than the debt of America, France, Germany and indeed lower than many other countries.”
Brown remains reluctant to set out the measures his government is willing to take after 2010-11, the last year for which there are departmental spending totals. He also challenged polls showing that the electorate wanted to see big public spending cuts, saying if people were asked whether they wanted to protect frontline services, such as health, schools and police, they would say they did.
But Brown is under political and expert pressure to say more about how he will reduce debts. He is likely to set out some of his plans in the autumn, by which time he hopes the country will be clearly coming out of recession.
He said he understood people had not yet seen the results of the government’s actions, and insisted by the time of the election the country will be making a choice, rather than as at present holding a referendum on Labour.
Fiscal policy defended as new figures suggest government has actually prevented large rises in unemployment
Gordon Brown departed for his summer holiday today predicting that Britain may be able to avoid the large rises in unemployment that are likely to take place elsewhere in the world and has already prevented 500,000 people joining the dole queues.
Speaking at his closing press conference of the political season, the prime minister suggested that the government’s interventions on fiscal policy had helped slow the pace of rising unemployment.
No 10 is understood to be looking internally at charts suggesting that the Job Seeker’s Allowance count could hit a peak 500,000 lower than the Treasury had previously thought, saving as much as £2bn in benefit costs.
In the budget, the Treasury used an average of city forecasters to predict the unemployment claimant count would “rise from … 1.39m to 2.09m at the end of 2009, and to 2.44m at the end of 2010″.
Although economic growth is thought to have been worse than the Treasury predicted in the spring, the latest figures from the Office of National Statistics show the claimant count in June had risen to 1.56m, an increase of only 23,000 on the previous month, compared to monthly increases of 80,00 per month at the start of the year.
At his Downing Street press conference, Brown insisted he was not making predictions about unemployment, but noted that even last month 300,000 people had left the claimant register suggesting it was still possible to find work.
He added: “I think as people look at the situation in the next few months they will find unemployment rising very fast in other countries. The question is whether we can prevent unemployment rising as fast. If we had not acted, and taken the fiscal policy decisions we have, unemployment would be higher.”
Experts are so puzzled by the low claimant count, and its divergence from the Labour Force Survey figures showing unemployment at the much higher figure of 2.38m, that they have called for the Department for Work and Pensions to conduct a brief inquiry.
John Philpott, chief economist at the Chartered Institute for Personnel Development, said the size of the gap between the two figures of 800,000 warranted an explanation.
He said: “It could be that the government’s employment measures are having an effect or that the middle class do not want the hassle of signing on, or the poor think the regime is too tough, or that migrants are not allowed to claim. We do not know. The levels of inflow are going down and the levels of outflow are going up. Yet redundancies are at 300,000 a month, and there are vacancies of 250,000 – that would suggest the claimant count would be higher.
“If you had asked me three months ago I would have thought the claimant count would rising now by 100,000 a month, but it is now just as likely we will see the numbers rise slowly.”
Brown was careful not to say that the recession was coming to an end, and repeatedly said he was not going to be complacent. But ministers are desperately hoping that the figures are revealing the economy as stronger than expected.
Normally, unemployment is a lagging indicator, suggesting the unemployment rate could be close to 3m at the time of the general election next spring. But there is uncertainty inside Downing Street. Brown insisted: “If we had not intervened and acted decisively at least further 500,000 jobs would have been lost in this recession.”
He also argued the political debate should be turning on “the here and now question” of whether the government had been right to take the fiscal action it had, rather than debating how much spending will have to be reined in after the election.
He insisted his was the first government to introduce a debt reduction programme, pointing to the budget’s plan to raise taxes for high earners and to find £30bn in efficiency savings.
Without citing a source, he said: “Because of the action we have already taken our debt in most of the years ahead will be less than the debt of America, France, Germany and indeed lower than many other countries.”
Brown remains reluctant to set out the measures his government is willing to take after 2010-11, the last year for which there are departmental spending totals. He also challenged polls showing that the electorate wanted to see big public spending cuts, saying if people were asked whether they wanted to protect frontline services, such as health, schools and police, they would say they did.
But Brown is under political and expert pressure to say more about how he will reduce debts. He is likely to set out some of his plans in the autumn, by which time he hopes the country will be clearly coming out of recession.
He said he understood people had not yet seen the results of the government’s actions, and insisted by the time of the election the country will be making a choice, rather than as at present holding a referendum on Labour.
WASHINGTON — Fifteen states have crossed a painful threshold: 10 percent unemployment. More states, and the nation, likely will follow, one of the biggest dangers to an economic recovery.
How consumers behave in the face of rising unemp…
More than 500,000 Americans will exhaust their unemployment benefits by the end of September. And by the end of the year, the number will near 1.5 million, according to a report released Friday by the National Employment Law Project.
“It is …
WASHINGTON — Relentlessly rising unemployment is triggering more home foreclosures, threatening the Obama administration’s efforts to end the housing crisis and diminishing hopes the economy will rebound with vigor.
In past recessions, …
ALBANY, N.Y. (AP) — More than 850,000 New Yorkers were unemployed in June, pushing the state’s jobless rate to 8.7 percent from 8.2 in May. State labor officials say that’s the highest level since October 1992.
In New York City, the non-seas…
The number of people claiming jobseeker’s allowance increased by a relatively small 23,800 in June to 1.56 million
Unemployment shot up by a record 281,000 in the three months to May, with the jobless rate topping 10% in one region for the first time in this recession, official data shows.
The rise took the jobless total to 2.38 million, the highest level since 1995, on the broadest Labour Force Survey measure of unemployment by the Office for National Statistics.
Youth unemployment jumped to a 16-year high of 726,000 after a quarterly rise of 95,000 – the biggest on record – and the number of people out of work for longer than a year rose by 46,000 to 528,000, the highest for 11 years.
The West Midlands was the hardest hit region, with joblessness jumping to 10.3%. The north-east, Yorkshire and Humber, and London were next in line, but the south-east fared best, at 6.1% unemployment.
Brendan Barber, general secretary of the TUC, said the figures were “truly horrendous. It’s particularly worrying that over half a million unemployed people have been out of work for at least a year. With a new generation of school and college leavers soon starting to look for work, our unemployment crisis will get even bigger,” he warned.
Prof David Blanchflower, the Bank of England’s former labour market expert, said: “There is absolutely no sign that the recession is over. It seems to be worsening. There has been a very worrying rise in unemployment amongst the young and they are not eligible for benefits.”
He said this was part of the reason why the ONS had reported the smallest rise in unemployment measured on claimants, which rose by only 23,800 in June. Most young people are not eligible for jobseeker’s allowance.
The figures also suggested people were coming off the claimant count to go into part-time jobs because they could not find full-time employment. Philip Shaw, an economist at Investec Bank, said the claimant count figures had become unreliable, “biased down by individuals moving off the count on to government schemes such as the New Deal”.
Jaguar LandRover announced it will stop producing its X-Type at the Halewood plant on Merseyside, with the loss of up to 300 jobs. David Kern, chief economist at the British Chambers of Commerce, predicted unemployment would peak at about 3.2 million next year.
The figures also showed the number of people in work fell by 269,000 in the latest quarter to 29 million, after a record fall of 0.9% in the employment rate to 72.9%. More than 300,000 people were made redundant in the three months to May, the second highest figure on record, and a rise of 31,000 on the previous quarter. Vacancies fell to a record 429,000 in the three months to June, down by 35,000 from the previous quarter.
Manufacturing jobs continued to fall, down 201,000 over the past year to a low of 2.6 million. Average earnings, excluding bonus payments, increased by 2.6% in the year to May, the lowest figure since comparable records began in 2001, confounding last year’s Bank of England prediction that pay deals would soar this year.
The Centre for Cities thinktank is releasing a report today suggesting Swansea, Newcastle and Ipswich could suffer badly when public sector job cuts begin after 2011. It predicts that in the three years after that, 290,000 jobs will be lost in the public sector.
With unemployment rising and manufacturing declining, the economy needs more state help for a speedy recovery
Today’s unemployment figures show that, although banks’ share prices may be recovering, the labour market continues to deteriorate. Unemployment is set to continue to rise through the rest of the year and probably for the first half of next year too. The full human cost of the recession is still to be felt as the number of people out of work climbs towards 3 million.
The message coming out of the recession is clear: we need to build a broader-based economy, less reliant on consumer debt and more focused on investment and innovation. What is less clear is where the new jobs will come from. In the last economic cycle nearly three-quarters of all new jobs were created in the public sector, finance, construction and retail. Jobs will not be created in the same sectors in the next economic cycle. Other sectors will have to pick up the slack if we are to return to full employment.
While the need for the economy to rebalance is clear, the scale of the challenge that lies ahead is greater than people realise. After the last recession it took eight years to return to the previous level of peak employment – it could take even longer this time round. Employment in manufacturing – often presented as a potential source of jobs in the future recovery – has been falling at an annual rate of 3.7% over the last seven years, so just halting this decline would be a major change of trend.
The UK will therefore be reliant on a big turnaround in manufacturing and on services that aren’t in finance, retailing or the public sector for jobs growth in the next few years. The challenge of creating these jobs and achieving more balanced employment may be large, but it is not insurmountable. The UK has strengths on which to build – high-tech manufacturing, pharmaceuticals, services for export, business services, publishing, media and creative industries, for example. It could also stand to gain from increasing demand for green technologies as a result of attempts to address climate change and for care services as a result of our ageing population. The weaker pound, growing markets in emerging economies and concerted economic stimulus at home and abroad will all help.
But a rebalanced economy will not develop by chance. Some strategic government support for industry is also needed. As the financial crisis unfolded, Lord Mandelson trumpeted an “activist” approach to industry in an attempt to create an economy “with less financial engineering and more real engineering”. This was a move in the right direction but has not gone far enough.
We believe there is a more structural role for the state to correct market failures. The role government should play in the economy doesn’t stop when the recession is over. That is why we are calling for the government to match its rhetoric with the creation of institutions and policies that will “fix” an activist approach into the wider economy – including the creation of an infrastructure bank, government-backed university-business links, a national ideas bank and greater control for city-regions over their local economies.
A debate is beginning about how the UK economy will grow and what role the government should play in the process. The government should seize the opportunity to put in place the institutions and policies required to build a more sustainable employment base and ensure a speedy recovery to full employment. There are reasons to be optimistic and tell a positive story about the possibilities for growth and job creation in the UK – but that optimism depends on a supportive, strategic government.
Unemployment is rising. Foreclosures are surging. Lending is still constrained. So why exactly is the Obama administration waiting to act?
More on Housing Crisis
Scott Patterson writes in the Wall Street Journal that we won’t get inflation until unemployment is down below 5%:A rule of thumb is that inflation doesn’t become sticky until the unemployment rate dips below 5%…”I see very little prospect of acceler…
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
There is no shortage of threats to our economy. America’s unemployment rate recently hit its highest mark in more than 25 years and is expected to continue climbing. Worries are widespread that even when the economy finally rebounds, the recov…
And next for Britain, the semi-slump
British economic history warns us to beware false dawns. Those calling for spending cuts have got it wrong – again
‘The duration of the slump may be much more prolonged than most people are expecting and … much will be changed both in our ideas and in our methods before we emerge. Not, of course the duration of the acute phase of the slump, but that of the long, dragging conditions of semi-slump, or at least sub-normal prosperity, which may be expected to succeed the acute phase.” John Maynard Keynes‘s lucid warning, delivered in 1930, might equally apply today.
It is instructive to look at the pattern of the great depression. The level of Britain’s gross domestic product in 1930 was not reached again until 1934. The annual unemployment rate of 1929, 8.2%, was lower than in every year during the 1930s, reaching a high of 17.6% in 1932. Today, we are probably out of the acute phase of the present recession, but the recovery is likely to be protracted.
Output for the first quarter of 2009 was revised down to -2.4%. That is the biggest drop since 1958, as the Office for National Statistics revised its initial estimate of 1.9%. In addition, the fourth quarter of the 2008 figure was revised down to a fall of 1.8% – as was the figure for the second quarter of last year, from zero to -0.1%, meaning the recession started in April 2008. Data from the Index of Production published this month also suggests little evidence of any recovery. Manufacturing output continues to decline and is at a 17-year low.
The 1980s recession began in the first quarter of 1980, and lasted for four quarters. The unemployment rate at that time was 5.8%; it did not return to that level for 20 years. From the third quarter of 1990 onwards, the economy recorded five successive quarters of negative growth. In the second quarter of 1990 unemployment was 6.9% and did not return to that rate for seven years.
And the current slump? Employment peaked in April 2008; since then Britain has lost 430,000 jobs. That unemployment has increased more than employment has fallen is of particular concern, because it shows that firms have stopped hiring, which particularly affects the young.
So, based on output, employment and unemployment, the recession started in the spring of 2008. We have already experienced four quarters of negative growth, with more to come.
Economists are uncertain about the likely path of recovery. For example, less than a year ago Britain’s National Institute of Economic and Social Research was predicting that the UK economy would “escape recession”, forecasting positive economic growth in both 2008 and 2009. On 10 June this year, the NIESR said, “The monthly profile points to March as having been the trough of the depression.” But on 7 July it had changed its mind again, arguing, “March can no longer be considered the trough of the recession.” A month is a long time in economics these days.
I continue to be struck by the similarities between the US and the UK. The American National Bureau of Economic Research called the start of the recession in the US when employment began falling in December 2007. Since that time US unemployment has increased by 7.17 million, whereas employment has fallen by only 6.46 million. The unemployment rate has risen from 4.9% to 9.4%.
The US is six quarters into recession. Despite a substantial fiscal stimulus and very accommodating monetary policy there is little sign that recovery is imminent. There have been several false dawns. The monthly decline in US payroll employment, for example, slowed in May but increased again to 467,000 in June. The Conference Board’s consumer confidence index, which had improved considerably in May, fell again in June. The job outlook section of the index was also more pessimistic. Those respondents anticipating more jobs in the months ahead decreased to 17.4% from 19.3%, while those anticipating fewer jobs increased to 27.3% from 25.6%.
The Bank of England’s timid monetary policy committee should not have sat on its hands last week; it should have expanded further its programme of quantitative easing. In the current circumstances, if we are to avoid the “dragging conditions of semi-slump”, public spending cuts make absolutely no sense. The government should be increasing spending now – and by a lot – not least because it can borrow at such a low long-run rate of interest. In such circumstances, infrastructure and education are smart investments for all our futures. Most of the self-proclaimed experts calling for public spending cuts missed the recession in the first place.
So I have a question for Gordon Brown, David Cameron and Nick Clegg. What plans do you have to get unemployment down any time soon? If you want to transform a recession into a depression, go ahead and cut public spending. I would advise against it and so, I believe, would John Maynard Keynes. Voters want jobs.
David Blanchflower is a professor of economics at Dartmouth College and a research associate at the NBER. He was a member of the Bank of England’s MPC from June 2006 to May 2009