Fresh doubt is cast today on government claims that the private sector will be able to absorb the 330,000 jobs ministers admit will be lost in the public sector by 2015.
According to a major report, unemployment next year is predicted to soar to a 17-year high of 2.7 million. While the economy is still forecast to expand next year, that growth may be insufficient to prevent the jobless total climbing, which will add to fears of a "jobless recovery".
For those still in work, wage rises will run far below the level of inflation; around 2 per cent is forecast to be the norm, against price rises of around double that level for much of the year. The Chartered Institute for Personnel and Development, representing the nation's human resources managers, says its contacts with more than 1,000 HR managers in the public sector indicate that job losses in central and local government and their agencies will be higher than those envisaged by the Office for Budget Responsibility, the independent body now charged with producing economic forecasts for the Treasury.