U.K. jobless to jump 30% in '09 says new survey

The number of unemployed in the United Kingdom could jump by nearly one-third in 2009, according to a new survey released Monday.

The Chartered Institute of Personnel and Development (CIPD), a U.K. organization of personnel managers, said that job cuts in England and associated countries could reach as high as 600,000 next year as the economy slows dramatically.

In November, the number without work in those countries stood at 1.86 million. Thus, the '09 cuts would represent a 32 per cent increase in the ranks of the unemployed.

If correct, the prediction would be the worst year for layoffs since 1991, CIPD said.

"This time last year, in the face of some skepticism, the CIPD warned that 2008 would be the U.K.'s worst year for jobs in a decade. It was, but in retrospect it will be seen as merely the slow-motion prelude to what will be the worst year for jobs in almost two decades," said the association's chief economist John Philpott.

CIPD surveys personnel managers for its reports, a methodology used in the United States and considered to be a reasonably accurate gauge of near-term hiring plans.

Housing slowdown

Similar to the United States, the United Kingdom was hit by a housing sector slowdown which, in turn, hammered those financial products based upon continually rising home prices. The resulting credit crunch body-slammed major financial institutions and slashed the country's growth prospects.

Scotiabank recently revised its forecast for the U.K. economy, predicting the regional GDP would shrink by 1.9 per cent.

English business groups now say most companies are barely hanging on in the current economic environment and looking to cut payrolls.

"Most businesses are prioritizing survival at the moment," said David Frost, director general of the British Chambers of Commerce, in a press release arguing against an increase in the U.K. minimum wage.

By way of comparison, a one-third increase in the ranks of Canada's unemployed would represent an increase of 371,000 in the number of unemployed. A similar calculation in the United States would means another 3.3 million people in that country without work.

No fun with numbers

If one believes the CIPD prediction, however, the U.S. unemployment picture could wind up worse than the U.K. situation while Canada's could be better.

'09 GDP growth (%) Jobless increaseU.K. -1.9600,000U.S. -2.3 4.1 millionCanada -1.3 270,000Source: CIPD, BMO, Scotiabank

BMO Capital Markets currently forecasts that the American economy will contract by 2.3 per cent, 20 per cent worse than the United Kingdom. Canada, on the other hand, is expected to see its economy shrink by 1.3 per cent, almost 40 per cent less than across the Atlantic.

Reworking the math to incorporate the BMO growth rates would result in the United States losing more than four million jobs while Canada would see its jobless lines rise by approximately 270,000.