Jobless shock as dole claims rise at sharpest for 16 years

Official figures revealed yesterday that the number seeking Jobseeker's Allowance rose 15,500 in June to 840,100.

Job losses are increasing amid warnings of 'worse to come'.

The number of job vacancies, now 638,300, has also dropped to its lowest level for a year

The Office for National Statistics data also showed that the number of unemployed rose by 12,000 in the three months to May to 1.62million.

Capital Economics predicts another 900,000 will be out of work by the end of 2010, swelling the unemployed to 2.5million.

Liberal Democrat Treasury spokesman Vince Cable said: ' Ordinary people are now paying with their jobs for the economic incompetence of this Government. An economy based so heavily on debt was never going to be in a fit state to deal with global shocks like the credit crunch.'

Firms under economic
pressure are considering tens of thousands of redundancies.

Housebuilding companies have revealed plans over the past fortnight to cut around 5,000 jobs, with some firms reducing staff by up to 40 per cent.

Sales of homes are at their lowest level since records began in 1978 and further casualties are expected in the sector  -  and related areas such as surveying and law  -  if things do not improve.

 The British Chambers of Commerce is warning that Britain could be on the verge of a recession, casting an even bigger shadow over the employment forecast.

Shadow spokesman for work and pensions, Chris Grayling, said: 'It is clear now that joblessness is on an upward trend and that is likely to make an already difficult situation worse.'

The number of job vacancies, now 638,300, has also dropped to its lowest level for a year.

Howard Archer, chief UK economist at the consultancy Global Insight, said: 'Unemployment is a lagging indicator. It seems inevitable that extended very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market.'

The Bank of England has raised fears about the job market in recent months. Staff turnover is falling because those in work are 'less confident' about finding another position, according to its latest 'business conditions' survey.

Many firms are hiring temporary or freelance staff due to the ' uncertain outlook', it reported.

The figures also showed the number in work continues to climb.

It rose 61,000 in the three months to May to a high of 29.6million, including a record number of pensioners.

There are now 1.3million women over 60 and men over 65 who have jobs, many forced to work due to their poor financial situation.

About a third of people who are close to retirement age expect to keep working, according to a survey by the life insurer Zurich.