Q&A - What has happened to unemployment in the UK?

After a sustained period of falling unemployment and increasing employment, the recession in the UK has prompted a substantial increase in unemployment recently.

Recent changes in claimant count and labour force survey measures of UK unemployment are summarised in the chart below:

Looking at the data, you should be able to see:

• A long period of falling and then low unemployment from 1992 (recession peak) until 2008
• A steep increase in unemployment following credit crunch and global slump in 2008/09

Economists and business commentators expect that UK unemployment is likely to increase further during 2010.

It is also worth considering the link between economic growth (as measured by growth in GDP) and unemployment. The recent UK data for these two connected economic variables is shown below:

Looking at the chart above:

• Between 1992 and 2008, almost 4 million extra jobs were created in the UK economy
• There is a strong link between sustained economic growth (2-4% p.a.) and employment creation
• The recession of 2008/9 reversed the trend; employment fell by at least 0.5million