"The Booming Uk Economy"

Two men looking for jobs at a Job Centre in London

ump to:Last Updated: Wednesday, 15 November 2006, 12:43 GMT

Unemployment at seven-year high

Unemployment has been rising steadily
UK unemployment is continuing to rise - climbing by 27,000 to 1.71 million in the three months to September, the highest level in seven years.

The jobless rate rose to 5.6%, up from 5.5% in the previous quarter, the Office for National Statistics said.

The number of people out of work and claiming Jobseekers Allowance rose by 1,200 in October to 961,300.

Average earnings grew by 3.9% in the year to September, down from 4.2% in the previous month.

Other Office for National Statistics (ONS) data showed that that 141,000 people were made redundant in quarter, up by 3,000 from the previous three months.


UK UNEMPLOYMENT RATES JULY-SEP 2006
London: 8%
North East: 6.9%
West Mids: 6.1%
Yorks/Humber: 6%
North West: 5.6%
Wales: 5.4%
East Mids: 5.3%
Scotland: 5%
East: 5%
N Ireland: 4.7%
South East: 4.5%
South West: 3.9%
Source: ONS

The number of people working in manufacturing fell by 77,000 over the year to about three million - the lowest level since records began in 1841.

However, the rise in the UK population led to the number of people actually in work increasing by 56,000 over the quarter to 28.9 million.

The general secretary of the TUC, Brendan Barber, said that rising interest rates made matters worse for businesses - meaning that unemployment would continue to rise.

"The labour market is continuing to slacken," he said.

"Employment rates are down, the percentage of people who are economically inactive but want jobs is rising, and manufacturing has lost 77,000.

"The Bank of England should take care not to undermine the government's strong record on job creation."

Taken from: Unemployment at seven-year high - BBC News Wednesday 15th November 2006



Boom and bust
From Wikipedia, the free encyclopedia

In economics, the term boom and bust refers to the movement of an economy through economic cycles due to changes in aggregate demand. During booms, there is a high level of aggregate demand, inflation increases, unemployment falls, and growth in national income accelerates. During busts, or recessions, when aggregate demand is low, inflation decreases, unemployment rises and national income falls. In extreme recessions deflation (a sustained fall in the general price level) may occur. The causal relations between these indicators have been the subject of much debate from which ideas such as the NAIRU (non-accelerating inflation rate of unemployment) have emerged.

Due to its relevance to public policy, the workings of the economic cycle have been an important political issue since the Great Depression. Prior to this, classical economic theory variously either denied the existence of the economic cycle (Adam Smith), or claimed it was an inherent aspect of the capitalist system (Karl Marx).

Keynesian economics, which gained popularity during the Great Depression, aimed to prevent recessions. This was done by providing demand stimulus to safeguard employment. However, it was only applicable when there were surplus resources (of labour and capital). Neoclassical or Monetarist economics returns to the pre-depression belief that recessions are natural, and government intervention can only delay and worsen them. It holds that only central banks can regulate demand in any helpful way through the money supply.

It has been the case that Keynesian economics has been popular with left wing parties, as it encourages greater use of taxation and spending. Neoclassical economics, on the other hand has been associated with the New Right, Margaret Thatcher, Ronald Reagan, and the Neoconservatives of today.

The term "boom and bust" itself has been a motto of Social Democrat parties, claiming to represent a "Third Way" and who wish to regulate the economic cycle as to prevent both booms and recessions. The Labour Government of Tony Blair in the United Kingdom has gone about this via counter-cyclical spending policies (Keynesian) as well as giving the Bank of England control over interest rates (Monetarist).

Although to date this has led to low and steady inflation and low unemployment, some critics claim it will lead to lower growth over the long term.

The Austrian School of economics suggests instead that the business cycle of boom and bust is avoidable but inevitable after monetary manipulations by a central banking authority.


Taken from: Wikipedia