Austerity measures will result in 1.6 million job losses

The coalition government’s austerity measures will result in 1.6 million job losses, with the private sector hit hardest, according to a forecast from the Chartered Institute of Personnel and Development (CIPD).

The combination of the cuts in public spending announced in last month’s review, combined with next January’s VAT rise to 20%, will lead to 725,000 job losses in the public sector in the years to 2015/16. The forecast compares with the 490,000 job losses that chancellor George Osborne said he expected over the next four years.  

The toll will be even worse in the private sector where some 900,000 jobs will be lost, the CIPD predicts.

Dr John Philpott, chief economic adviser at the CIPD, said: ‘The test of the coalition’s overall strategy for balancing the public finances and restoring sustainable economic growth will be how quickly and by how much job loss on this scale is offset by net new job creation in the private sector as a whole.’

Philpott added that the CIPD thinks the private sector is capable of adding more than 300,000 net new jobs per year by 2015/16 if the economy grows faster than 2.5% per year on average.

‘But given the headwinds facing both the global and UK economy this looks like a tall order’, he added.

In its last estimate, the Office for Budget Responsibility, the independent forecaster set up by the coalition government, estimated that GDP growth in Britain will average 2.4% over the next five years. It is due to upgrade its forecasts at the end of November.