Unemployment jumped by 80,000 in the three months to July to reaching 2.51 million, the largest increase in two years, official figures have revealed.
The Office For National Statistics said the jobless rate now stands at 7.9 per cent, with figures showing a sharp spike in youth unemployment of 78,000, taking the total to 973,000.
Andrew Sissons, researcher at The Work Foundation, said that young people are being hit the hardest by the faltering economy:
“Young people have borne the brunt of this pain as they often lack the skills and experience to compete in what is an increasingly tough labour market."
The total number of people claiming Jobseeker's Allowance also rose by 20,300 in August to 1.58 million, the office said on Wednesday.
Liam Byrne, Shadow Secretary for Work and Pensions, told BBC News that this was 'a day of misery on the jobs front'. He pointed out that: "We’ve now got unemployment rising faster in Britain than in the eurozone, than in America and in Japan".
However, an increase in private sector employment of 41,000 partially offset a fall in public sector employment of 110,000. There was also a welcome increase in average earnings by 2.8 per cent in the year to July.
"It underlines the nature of the challenge we face, and I think will reinvigorate our determination to take steps that will get the economy growing, to support business and try and create an environment where the private sector can continue to grow the number of people it employs".
"It is in fact still growing - the number of jobs in the private sector - we have to give them even more support to do more".
According to a report by the think tank IPPR, up to two million new jobs needed to be created to return to pre-recession levels.