Wednesday, 15 October 2008

Unemployment is starting to pick up

Figures out today show we have 1,790,000 (ish) unemployed workers in the UK, that's up by 164,000 from three months ago. It's 5.7% of the workforce. Check out this BBC graph showing unemployment over the last couple of decades:

Click on image for larger view

It's not dramatic at the moment but it is inevitable. As I've spelt out in previous posts the UK economy has long been fuelled by MEW - mortgage equity withdrawal - people seeing their house go up in price and spending the "gains". At peak, in 2003, £93bn was spent into the economy like this.

Obviously MEW is now deader than a dodo crossed with a great auk so the economy has run out of fuel. We'll have to go back to making things for a living; the adjustment will take a while and be painful.

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