Bank job cuts blamed as Scotland slips behind UK

Encouraging signs that people are getting back to work in the UK failed to materialise in Scotland, with official figures recording a rise in unemployment from 189,000 to 205,000 between November last year and January this year.

In contrast, the Office of National Statistics figures revealed that UK unemployment fell by 33,000 over the quarter to January to 2.45 million, the lowest for almost a year and the biggest three-monthly fall for nearly three years.

Economists, business leaders and politicians expressed concern at Scotland's spiralling unemployment, much of which was down to redundancies in the financial sector.

"These figures confirm that Scotland is still lagging behind the rest of the UK, but it is not particularly easy to explain why," said David Bell, professor of economics at Stirling University.

"Retail figures have been poor and the weather has been bad, which will have contributed to a drop in economic activity.

"This very big fall in public sector employment can be explained by HBOS and RBS, and I was quite amazed by the numbers."

Separate figures published yesterday by the Scottish Government, which looked at the public sector, revealed that 6,800 jobs have been lost from the nationalised banks over the past year.

Prof Bell warned that more pain could be expected as more public sector cuts were made.

"I guess we are not looking at a quick recovery," Prof Bell said, "because the public sector is going to kick in with more job losses."

Offering more encouragement was the fact that Scotland's unemployment rate remained below that of the UK as a whole.

The proportion of Scots out of work was 7.6 per cent, compared with a UK rate of 7.8 per cent.

Liz Cameron, chief executive of Scottish Chambers of Commerce, shared Prof Bell's concerns that there were more cuts to come.

"What is worrying about these figures is that Scotland is seeing consistently rising unemployment at a time when the rest of the UK has been experiencing a sustained fall in the number of jobless," Ms Cameron said.

Labour hopes that the improving figures would prove helpful in the run-up to the general election were boosted by an improvement in the UK claimant count – the number of people claiming JobSeekers' Allowance.

Claimant count was down to 1.59 million in February after a fall of 32,300, the biggest monthly reduction since the end of 1997.

In Scotland, the claimant count stood at 138,500 in February, a drop of 600 since January, but an increase of 25,100 on February 2009. The encouraging UK trends were tempered by figures showing a 149,000 rise in economic inactivity to 8.16 million, 21.5 per cent of the working age population, and the highest figure since records began in 1971.

In Scotland, the number of people who are economically inactive stood at 1,559,000, or36.7 per cent of the working age population.

Those classed as economically inactive include students, those on long-term sick leave, those who have taken early retirement and those have just given up looking for work.

Claims that the falling unemployment figures were masking more serious structural problems were fuelled by ONS figures showing the number of people in the UK out of work for longer than a year jumped by 61,000 to 687,000, the worst figure since 1997, while joblessness among over-50s rose by 14,000 to 398,000.

The shadow work and pensions secretary, Theresa May, claimed that those figures were a "real cause for concern".

She added: "With fewer people in work and fewer jobs in the economy, there is now a real fear of a jobless recovery under Labour."

In Scotland, the enterprise minister, Jim Mather, claimed the fall in the claimant count suggested there were "fragile signs of recovery" across Scotland.

Mr Mather said it was important the UK government continued with a package of stimulus measures in its forthcoming Budget in order to help create and sustain jobs.

The minister also underlined the "vital importance" of the Scottish Government's economic recovery plan.

He said: "We are absolutely committed to delivering investment to reinvigorate the economy and help people get back to work."