The Chartered Institute of Personnel and Development (CIPD) has revised its forecasts for the UK’s economic and employment growth leading to mixed reactions.
It now expects the economy to grow by only 1.4 per cent in 2001 (originally forecast as 1.6 per cent) and 2.0 per cent the following year (down from 2.1 per cent).
The CIPD expects unemployment to peak at 8.7 per cent (approximately 2.7 million) in the middle of 2012, instead of the previous forecast of 9.5 per cent.
John Philpott, chief economic advisor at the CIPD, said that the situation was complex.
He explained that just as pay freezes and pay cuts allowed employers to retain staff during the recession, the ongoing freeze on pay was “helping our anaemic economy support employment”.
Mr Philpott said: “This is clearly preferable to a further very sharp rise in unemployment. But a combination of falling real wages and the likelihood of unemployment well above the pre-recession level for several years to come represents an equivalent amount of labour market distress.”
According to the latest figures released by the Office for National Statistics, UK unemployment fell by 26,000 in the three months to May.