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Cath Everett

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Unemployment set to soar


The coalition government’s austerity budget will result in the loss of 1.3 million jobs across the economy over the next five years, according to leaked Treasury estimates.

The unpublished private assessment, which was seen by the Guardian, indicated that the government expected between 500,000 and 600,000 posts to go in the public sector and an even higher figure of between 600,000 and 700,000 to disappear in the private sector by 2015.

A slide from the final version of a presentation on last week’s Budget said: “100-120 public sector jobs and 120-140,000 private sector jobs to be lost per annum for five years through cuts.”

The scaling back in public sector employment will be the direct result of the 25% inflation-adjusted budget cuts to be made across government departments, while the private sector will be hit by the loss of government contracts and the knock-on effect of lower public spending.

Chancellor George Osborne claimed in last week’s Budget speech that tackling the UK’s budget deficit would help to keep interest rates low and boost job creation in the private sector. His assumption is that private sector growth will create 2.5 million jobs over the next five years to offset the spending squeeze.

But John Philpott, chief economist at the Chartered Institute for Personnel and Development, warned that there was not “a hope in hell’s chance” of job creation at such levels.

He told the Guardian: “There would have to be extraordinarily strong private sector employment growth in a much less conducive economic environment that it was during the boom.”

Osborne was basing his estimates on the rises in employment seen during the 13 years of the last Labour government, when about a third of such growth came from the public sector. “This is a slower growth environment and there will be no contribution from the private sector,” Philpott said.

He predicts that 725,000 jobs are likely to go in the public sector alone by 2015, although the figure might be somewhat lower if the government succeeded in pushing through pay cuts.



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