Unemployment rises to 2.5 million

The total number of unemployed increased by 35,000 over the quarter to reach 2.5 million, marking the first quarterly increase since the three months to April 2010, the ONS said.

Despite the higher-than-expected rate, the number of people claiming job seeker's allowance fell 1,200 between October and November to reach 1.46 million.

The number of young people out of work has also risen, with the employment rate for those aged between 16 and 24 down 0.1% to 70.6% for the three months to October.

David Birne, insolvency practitioner at HW Fisher & Company chartered accountants, said the outlook for employment is bleak.

"The latest unemployment figures are a taster of what is to come in 2011," he says. "This time next year we expect unemployment to be considerably higher than it is at present, as many more of Britain's companies go to the wall."

He added: "With the VAT rise, rising inflation and potentially higher interest rates cutting further into people's spending power next year, things are only going to get tougher.

"For the UK's businesses and their employees, 2011 is shaping up to be harsher than any of the past three years."