Shock unemployment increase

This puts unemployment at its highest level since February 2010 and the jobless rate has risen to 7.9%.

The number of people claiming Jobseeker’s Allowance rose by 37,100 in July to 1.56m, its biggest increase since May 2009.

The claimant count has now risen for three months in a row.

Chris Williamson, chief economist at Markit, said: “Business confidence clearly needs to rise before employment growth will pick up again, but at the moment the surveys suggest that companies remain worried about economic growth both at home and abroad and are generally erring towards cost-cutting rather than expansion.”

Daniel Callaghan, director at MBA & Company, said: “After a brief respite in the unemployment data last month, these latest figures paint a more realistic but bleaker picture of the economy.

“The UK jobs market has been in dire straits over the last few weeks. Banking sector recruitment has been frozen and confidence is low in the business market.”

Amit Kara, economist at UBS AG, said: “There’s a global shock and the UK has been buffeted by that. Looking forward we should continue to expect weak employment data.

“It does open the debate about a Plan B.”