Jobless total will top 3m in two years, says Treasury

Unemployment will rise to more than three million over the next two years, according to Treasury forecasts disclosed yesterday. 

The figures show ministers are prepared for the amount spent on joblessness benefit almost to double by the spring of 2011. 

Last week a Bank of England official said it was possible that that unemployment could rise to four million, a figure that would surpass the record 3.3million on the dole during the deep recession of the early 1980s. 

The Treasury calculations suggest the Government expects to spend just over £2billion on Jobseeker's Allowance, the main benefit for the unemployed looking for work, in the financial year that ends today. 

However the amount needed to pay the benefit is expected to rise to £3.25billion over the next 12 months, and to £3.8billion in 2010-11. 

Revealed to MPs in answer to a parliamentary question from former Labour minister Frank Field, this rise is predicted to increase costs to taxpayers by 84 per cent. 

It is thought 2.5million will be unemployed by the spring of 2011. 

Last month the claimant count rose by 138,400, the largest monthly increase since modern counting methods began in 1971  continues here

Ed Balls: minister fears rise of fascism amid economic gloom

The economic crisis could spark a resurgence in the Far Right, a close ally of Gordon Brown has suggested.

Ed Balls, the Children's and Schools Secretary, said the downturn was likely to be the most serious for 100 years, and his comments appeared to raise the prospect of a return to the Far Right politics of the 1930s and the rise of Facism.

His warning, in a speech to activists at the weekend, came after a trade union baron warned that far right parties were trying to hijack the campaign for "British jobs for British workers".

The row over foreign workers has gathered momentum in recent weeks and Mr Balls seemed to suggest the recession could trigger a return to the Far Right politics that prospered in the Great Depression of the 1930s.

He told Labour's Yorkshire conference: "The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years.

"I think that this is a financial crisis more extreme and more serious than that of the 1930s and we all remember how the politics of that era were shaped by the economy."

The remarks are significant because Mr Balls was a key adviser to Mr Brown during his decade at the Treasury as Chancellor of the Exchequer.

Mr Balls said that he believed this to be "the most serious global recession for over 100 years".

He said: "We now are seeing the realities of globalisation, though at a speed, pace and ferocity which none of us have seen before. The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years as it will turn out."

Last week Derek Simpson, the general secretary of Unite, gave warning that far right elements were hijacking a campaign against foreign firms bringing in non-British workers.

He said: "We are deeply concerned that other organisations like the BNP are latching onto the movement for their own racist agenda."

Last night, George Osborne, the shadow Chancellor, said Mr Balls' comments were at odds with Treasury forecasts suggesting a recovery in the third quarter this year.

He said: "This is a staggering and very worrying admission from a Cabinet Minister and Gordon Brown's closest ally in the Treasury over the past ten years.

"We are being told that not only we are facing the worst recession in 100 years, but that it will last for over a decade – far longer than Treasury forecasts predict.

"In this time of recession, a Cabinet rift over the economy could be deeply damaging.

"We need immediate clarification of whether Ed Balls is speaking for his colleagues in the Government."

The Liberal Democrats compared the comments with those made by Treasury minister Baroness Vadera, when she claimed she was seeing "green shoots" of economic recovery, echoing remarks by former Tory Chancellor Norman Lamont in 1991.

She was criticised for saying last month: "I am seeing a few green shoots, but it's a little bit too early to say exactly how they'd grow."

Vincent Cable, the LibDems' Treasury spokesman, said: "Instead of giving clear and consistent leadership, government ministers are oscillating between complacent optimism and this doom laden picture of Armageddon.

"Surely the truth lies between the two? This is a serious crisis but not hopeless."

The news came as the Financial Services Authority, the City watchdog, warned that the UK was at risk of a deeper-than-expected recession.

The authority said that the worst financial meltdown "in more than 70 years" has far from run its course and the British economy was predicted to shrink by 2.2 per cent this year.

It also said that Britain's 'vulnerable' banks need to make huge culture changes to survive the recession.

A spokesman for Ed Balls denied he had been trying to draw parallels with the Far Right.

He said: “The speech was about the difference between Labour and the Tories on the economy. It was not about trying to draw parallels with the Far Right. continues here

ECONOMIC DOWNTURN 'WILL DEEPEN'

The head of Barclays bank predicted that the economic gloom gripping the UK would deepen further, with house prices set to tumble as unemployment figures soar.

John Varley, group chief executive of Barclays, painted a bleak outlook, predicting that property prices could fall by up to 30%.

In an interview with Jeff Randall Live on Sky News, the bank boss also criticised mortgage borrowing levels over the last decade.

The comments will be seen as highly significant in the City as they come from such an eminent figure.

Mr Varley warned that the UK was only "halfway" through the slump with house prices set for even greater falls.

He said: "Our view was that from the top to the bottom, you would see a fall of something like 25 to 30%.

"I suspect we're about halfway through that at the moment. I mean that slowdown, the negative house price inflation started in 2007, it's accelerated in 2008.

"We're probably about halfway through that period, so in other words we've got another 10 to 15% to fall between now and the end of next year. That would be our assessment." continues here