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Official data shows that the number of people out of work surged by 164,000 between June and the end of August, reports the Telegraph.
Jobless numbers are now at their highest level since March 1998 when 1.8 million people were out of work.
James Purnell, the work and pension secretary, described these as "uncertain times".
Meanwhile, Brendan Barber, general secretary of the Trades Union Congress, commented: "There can be no assumption that the people who are losing their jobs will find it easy to get new ones and they will need all the help they can get with redundancy pay, re-training and personal advice."
According to the Financial Times, unemployment could reach two million by the end of the year.
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