The latest Labour Force Survey (LFS) figures show that unemployment in the United Kingdom increased by 53,000 in the three months to March 2010, a rise of 0.2% on the previous quarter. Unemployment in the UK now stands at 2.51 million, the highest level since December 1994. The number of people claiming Jobseeker’s Allowance (JSA) came in at 1.52 million for the month of April.
The Office for National Statistics (ONS) figures also show that the number of people who have been unemployed for more than one year increased by 94,000 over the quarter, now standing at 757,000. On the positive side the number of people who have been unemployed for up to six months fell by 52,000, to reach 1.21 million.
The risk of unemployment in this current economic environment is a very real possibility and the future of the UK economy is far from certain. The new government’s dedication to cutting the level of national debt should have a significant and negative impact on the economy in the short-term, via contracting government spending multipliers.
The reality is that we have spent too much as a nation and now there are no more opportunities for the government to spend its way out of economic trouble. With a decreasing level of government financial support for the economy and the Bank of England all but powerless to alter the direction of the economy through additional reductions interest rates UK workers face extremely uncertain times.
Although the base interest rate is still extremely low at 0.5%, current rises in inflation may force the hand of the Monetary Policy Committee (MPC) to raise rates at some point soon, which will further dampen the economy and likely cause further rises in unemployment.
Looking to unemployment insurance
In such uncertain times it makes complete sense to look to the insurance market for suitable protection options available. It is possible to take out unemployment cover, such as unemployment mortgage insurance, that can payout a monthly amount for up to 24 months should you suffer forced redundancy.
Although premiums for these policies have been rising recently it does reflect the fact that the risk of redundancy is a very real possibility at present and this is likely to continue going forward.