Darling hopes recession may soon be over – but jobless crisis is only just starting

But the upbeat Budget forecast from Alistair Darling will be of little comfort to the tens of thousands who have fallen victim to the downturn and now find themselves in the dole queue.

Unemployment has already topped two million for the first time since Labour came to power more than a decade ago and figures tomorrow morning will show the number is growing and growing quickly.

Nearly 200,000 workers are reckoned to have lost their jobs in the last three months and another million or more will do so before this downturn ends.

Think Woolworths, Aviva, GKN, BT, Royal Bank of Scotland or any other bank, and the hundreds and thousands of small firms laying off staff or going bust.

This is more than a headache for the Government — it is a disaster — and Darling and Gordon Brown have both promised a Budget for jobs as they battle to beef up their poll ratings.

The jobs market tends to respond to conditions in the broader economy with around a six month lag in the UK, meaning unemployment will still be rising at the time of the next general election even if growth returns at the end of this year as Downing Street hopes.

Unemployment was above 11% for much of the mid-1980s before falling below 7% in early 1990. However, the Nineties recession pushed the jobless rate back above 10% and it remained there until 1994 — long after the recession was officially over. Having spent much of the middle of this decade below 5%, a return to double digit rates is now on the cards.

In fact, the unemployment rate could be as high as 11% by the middle of next year — and almost a quarter of the jobless will have been out of work for at least 12 months.

Winning an election against such a backdrop looks increasingly unlikely..

London is hurting. The unemployment rate in the country is 6.5% but in the capital it is already 7.5%, and some 30,000 more financial jobs are likely to go in the City and Canary Wharf this year. The knock-on effect on everything from tailors and hairdressers to bars and restaurants will be telling.

This is the environment in which thousands of school and university leavers will find themselves this summer and there is a danger many end up on the list of long-term unemployed early in their adult lives. For a graduate with thousands of pounds of debts, the outlook is bleak, as it is for a Government with rather too much debt of its own. The implications for the public finances are plain to see. Rising unemployment means lower tax receipts and higher spending on benefits for the jobless so Brown and Darling are right to be worried as they try to put the UK back on an even keel.

So what might a Budget for jobs contain? There will certainly be plenty of talk about "real help" for the unemployed but as ever with this cash-strapped Government, there will be more spin than susbstance.

There will be 400,000 "green" jobs created to establish a low-carbon economy, more investment in Jobcentre Plus, and initiatives to give unemployed youngsters training and work experience. Darling could also give employers incentives to hire new staff or retain current staff through tax breaks.

But in order to do any of this, he needs money — and the cupboard is bare. The Chancellor cannot give to one area of the economy without taking from another. And voters could be forgiven for thinking any measures to create "green" jobs for the future are nothing more than a gimmick by a Government running out of ideas.

One thing is for certain: whatever is promised tomorrow, dole queues reflect the true state of the economy. The worst of the financial crisis may have passed, but the jobs crisis is only just getting started.