By Piper Terrett, 21/04/2009 00:00

The UK's economy in numbers

Despite the government's attempts to reassure us it has a tight grip on UK PLC, recent polls show that the deteriorating economy is still the number one concern among voters.

In February, 67% of people questioned by Ipso MORI said the economy was among the most important issues facing Britain. And little wonder, when the numbers involved are so colossal.

As the chancellor's Budget speech looms, we examine some of the figures Alistair Darling will be juggling with when he addresses the nation from the despatch box.

Unemployment
According to figures released by the Office of National Statistics (ONS) in March, 2.03 million people, or 6.5% of the UK population, are out of work. The number of jobless workers grew by 165,000 in the three months to January 2009 and by 421,000 over the year as the credit crunch began to bite. In March, 1.39 million people were recorded as claiming the Jobseeker's Allowance.

See where the UK's unemployment is worst

This level of unemployment has not been seen since 1997, and numbers are rising much faster than the government anticipated. Today the UK's unemployed would fill Wembley Stadium more than 22 times over.

But some business leaders predict that worse is yet to come. The British Chambers of Commerce forecasts that job losses will hit 3.2 million next year, or just over 10% of the work force. What's more, leaked information from the International Monetary Fund suggests the UK will find it more difficult to recover from the recession than its peers.

The banking crisis
The first victim of the shocking banking sector crisis was Northern Rock, which collapsed in September 2007 and was nationalised by the government. But plenty more banking horror was waiting on the horizon.

In October last year, the government bailed out Lloyds TSB, HBOS and Royal Bank of Scotland to the tune of £37 billion and made £450 billion available to improve liquidity and guarantee bank debt.

This intervention failed to stop RBS from unveiling massive losses of £28 billion in January - the biggest loss in UK corporate history. RBS blamed an increase in bad debts and write-downs associated with the ill-fated acquisition of ABN Amro.

UK PLC
As a result of the government's intervention, the taxpayer now owns Northern Rock, 70% of RBS and 65% of Lloyds-HBOS. And while some commentators have criticised the part-nationalisation as rash, the chancellor claims that, in the long run, the taxpayer will benefit from these measures.

So far it's estimated that the bailout has cost us an eye-watering £700 billion. The same amount would buy nearly 600 NASA space shuttles. Yet there's little sign of any improvement in liquidity or increased lending between the banks.

However, the true cost of the intervention could be much higher. In January, the Treasury Select Committee questioned the government's figures and urged it to be more upfront about the total cost of shoring up the UK's banks. MPs have good reason to be concerned.

At the end of December, general government debt stood at £750.3 billion or 52% of gross domestic product (GDP). Meanwhile, the Budget deficit stands at a record high, with the February shortfall coming in at £1.8 billion.

But if the ONS has to add to these figures the debts of the part-nationalised banks, this could push government debt figures through the £2 trillion mark - a figure not seen since the 1950s when the UK was paying back its war debts. Considering that £2 trillion would buy every person alive 16 Big Macs, is the UK taxpayer getting value for money?

Personal debt
If UK PLC could do with a money makeover, then consider this snapshot of our individual financial health. Personal debt levels in the UK currently stand at £1.4 trillion according to charity Credit Action - the same amount of cash would fund 538 CERN colliders.

But if this figure seems alarming, it's some small comfort to know that in the last year total individual UK borrowings increased by only £42 billion, compared to £116 billion in the year to January 2008. Average household debt in the UK currently stands at £9,500, excluding mortgages, and £59,730 per household including mortgages.

However, with unemployment rising, many individuals are struggling to keep their heads above water. In the three months to the end of December 2008, 19,100 people were declared bankrupt in England and Wales, 20% more than was recorded during the same quarter in 2007.

With pressure mounting for a Budget to tackle these difficult economic challenges, it's clear the chancellor has an unenviable task ahead of him.

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