DT: Unemployment to rise as 100,000 lose job before summer

Hello and good morning everyone!

I hope everyone has been having a great Easter weekend! :)

An extra 100,000 people will lose their jobs before the end of the summer and unemployment will not fall for another year and a half, according to a grim report from the Institute for Public Policy Research (IPPR).
Based on the pattern of the jobless rise in 2011, the IPPR expects 50,000 more men and an equal number of women to lose their jobs this year as public sector jobs cuts continue to bite.
My view is that under the previous Labour government, the public sector got bloated and was busy implementing/enforcing all the micromanagement of our lives that characterises certain governments, e.g. 33 new crimes a month (see *). We were fine before all those extra laws and we will be fine if those extra laws got abolished.

My questions are:
1) What are the implications of these job losses on the government balancing it's budget? Public sector jobs are funded by tax from the private sector. On one hand it is less salaries to pay but OTOH it is less income tax revenue and probably more benefits payments. But it is also arguable that public sector jobs don't directly add value to the economy (as would say, a car maker exporting cars or an oil company selling oil) but rather provide the infrastructure for a healthy economy to flourish. After some point the public sector becomes a drain rather than a synergistic contributor to a healthy economy.

2) What will be the outcome of such job losses on house prices, fuel prices, inflation and the cost of living? Less aggregate spending power of the people suggests a drop in all of that.

3) Will there be any effect of such job losses on bank borrowing/saving interest rates?

4) It seems the ethos of some governments is that people can be "made good" through extra laws. Do you think this is the case? I don't think so.

* Labour invents 33 new crimes every month - Telegraph
Labour has introduced 14,300 new offences since taking office in 1997, with Gordon Brown's administration inventing crimes at a rate of more than one a day.

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