Report: Thousands more to join dole queues in the North

An extra 8,000 people may be out of work in the North by the middle of next year, a report warned today.

The economy should avoid a recession but growth will slow to 0.5%, the Oxford Economics dossier added.

Reduced industrial demand, the end of large public sector construction projects and a public services spending increase reduced in real terms by inflation close to zero are all factors.

The paper said: “Our estimate is unemployment may be 8,000 higher by mid-2009.

“The risks are clearly on the downside but at the time of writing (September) the economy should avoid a recession.

“Even so, a substantial rise in unemployment can’t be avoided.”

The number of people claiming unemployment-related benefits in August stood at 27,600. This was an increase of 800 from the previous month and a rise of 4,200 over the year.

Economy Minister Arlene Foster has warned against the danger of talking ourselves into a recession amidst global financial turbulence.

She admitted inflation and falling consumer confidence posed a threat.

The Oxford Economics research- ’Challenging Times, Autumn 2008 Forecasts’ warned that the golden age was over.

It was produced for Ms Foster’s Department of Enterprise, Trade and Investment (DETI) and probed the economy’s position against the rest of the UK.

“The analysis suggests that in the current economic climate the challenge of achieving a step change in relative economic performance terms remains as great as ever.”

Strong improvement in the relative employment rate seen over recent years isn’t expected to continue as the labour market stalls, particularly in construction and retailing.

The document added the lack of convergence in productivity (with the rest of the UK) over recent years should not blind us to the gains achieved.

It said there had been a long period of strong labour market growth, more migration and escalating personal wealth.

However, improvement in wages towards the UK average appears unlikely.

Low salaries are attracting investors and a shift to higher wage companies appears difficult in the current global climate, at least in the short term.

Ms Foster has warned the North faces the lowest levels of growth since the early 1980’s but appealed for cool heads.