Unemployment predicted to rise to a peak of 2.9m in 2016

Unemployment will not fall below 2.5 million until 2016 at the earliest and will peak at 2.9 million next year, an expert predicted.

John Philpott, chief economic adviser of the Chartered Institute of Personnel and Development (CIPD), forecast that the UK’s jobless rate will jump to 8.8 per cent at the end of 2013 amid continuing cuts in the public sector.

He said this year will be “dire rather than disastrous”, with fewer people in work, a continued pay squeeze and official unemployment reaching 2.85 million, before rising to 2.9 million in the first half of 2013.

Writing in the latest issue of the CIPD’s People Management magazine, Dr Philpott said: “I expect public sector employment to fall at an average rate of 30,000 a quarter. This will not be offset by private sector job creation, resulting in a net reduction in employment of 120,000.

“I don’t think the subsequent jobs recovery will be strong enough to bring unemployment below 2.5 million until 2016 at the earliest.”

Dr Philpott added that the “relative calm” of the industrial relations atmosphere outside the public sector might not last, adding: “The combination of job shortages, rising job insecurity and a further fall in real earnings may test the resolve of the UK workforce far more than it did in the recession, possibly fostering a mood in workplaces that could prove hard to manage.”

The report was published ahead of new unemployment figures on Wednesday, which are expected show a rise from last month’s figure of 2.6 million unemployed people.