UK's unemployed face a bleak Christmas

Shirley Bloom is keeping her fingers crossed for her interview. "It's the first I've had after 40 applications," the former civil servant says.

Mrs Bloom, 36, lost her job with the UK's tax and customs department last month. The mother of three who lives in Cardiff, Wales, is finding the drop in income tough.

"The kids will notice it at Christmas," she says. "There won't be so many toys. We're already planning to have it at my mum's to make it cheaper."

On one measure, the number of unemployed people in the UK fell by 20,000 to 2.45 million in the three months to August, taking the rate down to 7.7 from 7.8 per cent for the three months before.

But the number of people claiming unemployment benefits climbed by 20,000 last month, the second straight month it has risen.

Unemployment in the UK is expected to rise by the end of the year, not least because of tough public-sector spending cuts. In Mrs Bloom's home city the civil service union, the PCS, believes there are nine people chasing every job.

PricewaterhouseCoopers has estimated public-sector spending cuts could lead to the loss of 500,000 private-sector jobs - on top of the 490,000 public sector jobs politicians last week admitted would go.

Spending cuts have already sparked a widespread reduction in services. By next year, a squeeze on local authority budgets will lead to cutbacks in many youth schemes, services for older people and care for the disabled.

Barbara Guiney, who was made redundant in October last year, certainly knows what it is like to face rejection. Since starting her hunt for employment Ms Guiney, 48, has made 274 applications for jobs.

She has top-rate references and worked for her last employer for 17 years, yet she has had only a handful of interviews and thinks her age is against her.

"People see my age and who I have worked for and assume I will want loads of money," Ms Guiney says. "They take the much cheaper graduate over me, even though I'm prepared to work for much less than my former salary."