Rise in Jobseekers’ Allowance claimants heightens fears of double-dip recession

The unexpected rise in those claiming Jobseekers’ Allowance has heightened fears of a double-dip recession – or even a ‘triple tumble’, economists have warned.

Yesterday, official figures released by the Office for National Statistics revealed the number of people claiming the out-of-work benefit increased by 23,500 to 1.64 million in January – the largest increase since July last year.

This increase reversed the fall in the number of benefit claimants over the previous two months, and shocked economists who had predicted a fall of 10,000 claimants, the Telegraph has reported.

Graeme Leach, chief economist at the Institute of Directors (IoD), said: “The numbers support the IoD’s view that the economy may experience a double-dip to the recession in the first half of 2010.

“Weak employment and unemployment statistics are compounded by falling real earnings, with inflation well ahead of pay growth. Throw in a public sector recession in 2011 and we may even end up with a triple-tumble recession.”

Economists also warned that the level of unemployment was likely to start rising again later this year, despite a 3,000 dip to 2.46 million in the fourth quarter of 2009.

Long-term unemployment also rose between October and December, with the number of people out of work for more than 12 months up by 37,000 compared with the third quarter to 663,000.

Employment minister Jim Knight said: “The large increase in unemployment we saw a year ago is now translating into higher numbers who are long-term unemployed. We responded to the recession by investing £5bn to get people into jobs, which the Tories opposed. Long-term unemployment today is nowhere near as high as when Labour came into office.”

But Theresa May, the shadow work and pensions secretary, accused Labour ministers of pursuing “a path that will undermine confidence… and put the recovery at risk”.

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