Jobless total jumps by 60,000 adding to Britain's economic 'tragedy'

In a fresh blow for the Prime Minister , official figures showed the number of jobless jumped to 1.67million in the three months to June.

Economists, MPs and unions warned that times will get tougher for families already struggling as the credit crunch bites.

Out of work: New figures reveal unemployment has surged

The figures from the Office for National Statistics show that the jobless total, including people not eligible for Jobseekers' Allowance, reached its highest watermark for over a year, giving a new unemployment rate of 5.4 per cent.

The worst-hit sectors were finance and business – with jobs falling 16,200 over the past three months – and distribution, hotels and restaurants, which had 17,700 fewer jobs.

In the three months to June, 126,000 were made redundant – a rise of 14,000 on the previous quarter.

The Conservatives' work and pensions spokesman Chris Grayling said: 'This is a really striking jump in unemployment and is extremely worrying.'

Liberal Democrat Treasury spokesman Vince Cable said: 'Until now, low unemployment has helped sustain the belief that there might be a soft landing in the housing market without large-scale repossessions.

'The Government needs to move quickly to make sure people who lose their jobs don't face the double disaster of losing their homes.'

John Philpott, chief economist at the Chartered Institute of Personnel and Development, warned the rise in unemployment is 'gaining worrying momentum'.

Paul Kenny, general secretary of the GMB union, said: 'The figures are a tragedy and hide the misery for tens of thousands of households where people lose their jobs. I fear there are more job losses to come.'

Adam Lent, of the Trades Union Congress, urged the Bank of England to cut interest rates and the Government to stop offering public sector workers below-inflation pay rises.

Work and Pensions Minister James Plaskitt admitted the statistics are 'disappointing', but he pointed out that the number in work rose by 20,000 between April and June to 29.56million, the second highest on record.

Average earnings in the three-month period grew at an annual pace of 3.4 per cent, down from 3.8 per cent in the previous period.

It was the weakest rise since August 2003, although it was not sufficient to ease concerns about rising inflation.