However, inflation had reached 7.8%, and the following year, it reached a nine-year high of 9.5%; leading to increased interest rates.Another recession occurred from 1990 to 1992. Unemployment began to increase, and by the end of 1992, nearly 3,000,000 in the United Kingdom were unemployed, a number that was soon lowered by a strong economic recovery. With inflation down to 1.6% by 1993, unemployment then began to fall rapidly and stood at 1,800,000 by early 1997. 21st century
The official unemployment rate in the 16 European Union (EU) countries that use the euro rose to 10% in December 2009 as a result of another recession. Latvia had the highest unemployment rate in the EU, at 22.3% for November 2009. Europes young workers have been especially hard hit. In November 2009, the unemployment rate in the EU27 for those aged 15–24 was 18.3%. For those under 25, the unemployment rate in Spain was 43.8%. Unemployment has risen in two thirds of European countries since 2010.Into the 21st century, unemployment in the United Kingdom remained low and the economy remaining strong, and several other European economies, such as France and Germany, experienced a minor recession and a substantial rise in unemployment.In 2008, when the recession brought on another increase in the United Kingdom, after 15 years of economic growth and no major rises in unemployment. In early 2009, unemployment passed the 2 million mark, and economists were predicting it would soon reach 3 million.
That occurs because employers know that when wages decrease, workers will shirk and expend less effort. Employers avoid shirking by preventing wages from decreasing so low that workers give up and become unproductive. The higher wages perpetuate unemployment, but the threat of unemployment reduces shirking. Before current levels of world trade were developed, unemployment was shown to reduce inflation, following the Phillips curve, or to decelerate inflation, following the NAIRU/natural rate of unemployment theory since it is relatively easy to seek a new job without losing a current job. When more jobs are available for fewer workers (lower unemployment), that may allow workers to find the jobs that better fit their tastes, talents and needs. As in the Marxian theory of unemployment, special interests may also benefit. Some employers may expect that employees with no fear of losing their jobs will not work as hard or will demand increased wages and benefit. According to that theory, unemployment may promote general labour productivity and profitability by increasing employers rationale for their monopsony-like power (and profits).Optimal unemployment has also been defended as an environmental tool to brake the constantly-accelerated growth of the GDP to maintain levels that are sustainable in the context of resource constraints and environmental impacts. However, the tool of denying jobs to willing workers seems a blunt instrument for conserving resources and the environment. It reduces the consumption of the unemployed across the board and only in the short term.