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| Spending cuts and VAT rise to cost 1.6m jobs, says CIPD | Spending cuts and VAT rise to cost 1.6m jobs, says CIPD |
| (about 6 hours later) | |
| The government's spending cuts and the rise in VAT to 20% in January will result in more than 1.6 million job losses across the public and private sectors, research suggests. | The government's spending cuts and the rise in VAT to 20% in January will result in more than 1.6 million job losses across the public and private sectors, research suggests. |
| The figure from the Chartered Institute of Personnel and Development (CIPD) is far higher than previous estimates. | The figure from the Chartered Institute of Personnel and Development (CIPD) is far higher than previous estimates. |
| It said the full impact of the government's Spending Review had been "understated". | It said the full impact of the government's Spending Review had been "understated". |
| The government has estimated around 500,000 public sector jobs will go. | The government has estimated around 500,000 public sector jobs will go. |
| The Treasury defended its spending cuts, saying: "The independent Office for Budget Responsibility has set out its forecast showing sustained economic growth in the years ahead, with employment rising and unemployment falling." | The Treasury defended its spending cuts, saying: "The independent Office for Budget Responsibility has set out its forecast showing sustained economic growth in the years ahead, with employment rising and unemployment falling." |
| Some business groups, including the CBI, have said that job creation in the private sector will be able to compensate for losses in the public sector. | Some business groups, including the CBI, have said that job creation in the private sector will be able to compensate for losses in the public sector. |
| However, the CIPD said that the private sector would be hit harder than the public sector. | |
| An average of 320,000 private sector jobs a year would have to be created by 2015-16 just to keep unemployment steady at 2.5 million, it said. | An average of 320,000 private sector jobs a year would have to be created by 2015-16 just to keep unemployment steady at 2.5 million, it said. |
| "The full impact of the coalition government's planned fiscal tightening has been understated," said Dr John Philpott, chief economic adviser to the CIPD. | "The full impact of the coalition government's planned fiscal tightening has been understated," said Dr John Philpott, chief economic adviser to the CIPD. |
| "The 490,000 public sector job losses cited in the Spending Review looks like an underestimate, given what most public sector managers are telling [us]." | "The 490,000 public sector job losses cited in the Spending Review looks like an underestimate, given what most public sector managers are telling [us]." |
| He put the total number of jobs to be lost in the public sector between 2009-10 and 2015-16 at 725,000. | He put the total number of jobs to be lost in the public sector between 2009-10 and 2015-16 at 725,000. |
| The number of jobs lost in the private sector due directly and indirectly from the cuts would be 650,000, with an additional 250,000 jobs to go due to the VAT increase, he estimated. | The number of jobs lost in the private sector due directly and indirectly from the cuts would be 650,000, with an additional 250,000 jobs to go due to the VAT increase, he estimated. |
| 'Tall order' | 'Tall order' |
| The CIPD said the private sector was "perfectly capable" of creating more than 300,000 jobs a year, but only if the economy grew faster than 2.5% on average a year. | The CIPD said the private sector was "perfectly capable" of creating more than 300,000 jobs a year, but only if the economy grew faster than 2.5% on average a year. |
| This, it said, "looks like a tall order". | This, it said, "looks like a tall order". |
| Initial estimates show that the UK economy grew by 0.8% between July and September, and by 1.2% in the previous three months. | Initial estimates show that the UK economy grew by 0.8% between July and September, and by 1.2% in the previous three months. |
| However, most economists expect growth to slow as a result of the spending cuts. | However, most economists expect growth to slow as a result of the spending cuts. |
| The government has argued strongly that the cuts are necessary in order to reduce the UK's budget deficit, which is one of the highest in Europe. | The government has argued strongly that the cuts are necessary in order to reduce the UK's budget deficit, which is one of the highest in Europe. |
| Reducing debt levels will restore the confidence of international money markets in the UK, and reduce interest payments that are sucking money out of the economy, it says. | Reducing debt levels will restore the confidence of international money markets in the UK, and reduce interest payments that are sucking money out of the economy, it says. |
| "The chancellor has set out a decisive plan to reduce the UK's unprecedented deficit and restore confidence in the UK economy," the Treasury said in a statement. | "The chancellor has set out a decisive plan to reduce the UK's unprecedented deficit and restore confidence in the UK economy," the Treasury said in a statement. |
| "Not taking action to tackle this problem would put the economic recovery at risk - a view shared by the International Monetary Fund, World Bank, G20, Bank of England and the OECD." | "Not taking action to tackle this problem would put the economic recovery at risk - a view shared by the International Monetary Fund, World Bank, G20, Bank of England and the OECD." |
| However, some economists argue that the size and the speed of the spending cuts could undermine the recovery. | However, some economists argue that the size and the speed of the spending cuts could undermine the recovery. |