Unemployment to fall to 5.6% by end of 2015 - economists

Mon, 21/07/2014 - 11:34 -- nick

Unemployment will fall to 5.6% by the end of next year from its current 6.5%, according to a group of economists.

The Item Club believes the UK's growth will be higher than any other rich economy's, creating more jobs and ensuring worklessness falls.

Criticisms of the way the coalition has managed the country's finances will be swept away, with over-spending falling and companies starting to release some of their huge cash stocks.

Peter Spencer, chief economic adviser to the Item Club, said:

"Business investment is being ramped up, generating over half of the growth over the last year and helping to rebalance the economy away from consumption.

"Underpinned by a strong labour market that provides the best of both worlds - boosting incomes via employment rather than wages, while keeping inflation low - the UK economy has hit the sweet spot."

To date growth has only led to small real unemployment falls while self-employment, much of it fake and driven by those who have lost public-sector work or been forced into it by work programme advisors, has made these reductions appear stronger than they are.

This has in turn led to a collapse in their earnings, to a point where they earn significantly less on average than someone in a minimum wage job.

Despite the fact that one-in-seven UK workers now works for themselves their earnings are not included in national averages, meaning the real fall in the value of pay is likely to be worse than thought.

Spencer did not address the issue of self-employment when making his predictions, but stated that pay, which has fallen so far behind the cost of living in the last six years, would see real rises over the next two years.

This appears unlikely given that June figures saw them increase by only 0.3% while inflation rose to 1.9%.

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