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Unemployment rises above 2.5m milestone • Jobless total rises to 2.51m • Unemployment rate at 7.9%• Public sector employment falls by 111,000• Claimant count rises by 20,300 in August•Youth unemployment increases to 972,000

The overall picture remains one of a jobs recovery that is much more sluggish than after previous recessions, analysts say.

ear ago. This compares with the 1.7% rise previously reported for the thre

as up 2% on a year ago. This compares with the 1.7% rise previously reported for the three

Overall the rise in VAT is likely to cause higher inflation, reduced GDP growth and some job losses in 2011 and into 2012 - so some deterioration in three microeconomic indicators at the expense of improved government finances. But in the long term a 20% VAT rate is unlikely to have any noticeable effect on UK competitiveness and growth. The long-term trend GDP is driven by supply side factors such as technological progress, working age population growth, improved work and enterprise incentives and the scale and quality of capital investment spending).

Interest Payments. The cost of paying interest on the government’s debt is very high. In 2008 Debt interest payments will be £31 billion a year (est 2.5% of GDP). In 2009, they will be £35 billion (similar to defence budget). Public sector debt interest payments could be be the 4th highest department after social security, health and education. Debt interest payments are rising close to £70bn given rise in national debt.

The Italian economy is expected to increase a mere 1 percent this year, and Portugal should post a 1.2 percent rise in GDP for 2008

Conversely, if the jobless total rises by Easter, inflation edges above 4% and consumers save rather than spend, Labour will be able to say that it is the coalition that has messed things up, killing off growth with its ill-timed and harsh austerity programme.

The apparent hoarding has the effect of making an already tight market—production has been falling as demand is increasing—look even more strained.

The rate of Consumer Prices Index (CPI) inflation rose to 4.5%, from 4.4% in July, according to figures from the Office for National Statistics (ONS). The Retail Prices Index (RPI) measure increased to 5.2% from 5%.