The number of Britons without work increased by 114,000 between June and August, the Office for National Statistics said. The unemployment rate has reached 8.1pc, 0.1pc more than analysts had been expecting and the highest total since 1994.

The grim figures reveal the number of people claiming Jobseeker’s Allowance in September increased for the seventh month in a row, by 17,500, to reach 1.6m, the highest total since the start of 2010.

Youth unemployment reached a record high of 991,000, but fell just shy of the one million mark some analysts had been predicting.

The number of jobless 16 to 17 year-olds increased by 3,000 to 205,000, while long-term unemployment rose by 60,000 to 867,000.

The Government will come under increasing pressure to explain what it is doing to combat rising unemployment. The ONS figures showed a slump in employment of 178,000 in the three months to August, the biggest fall in more than two years, and the largest-ever cut in the number of part-time workers, down by 175,000.

Cuts in the public sector are likely to have driven the fall in employment – however, changes to employment rules governing older workers could be responsible for the record reduction of 74,000 in the number of over-65s in employment.

From October, it became unlawful to retire anyone on the grounds of age, with many employers rushing to retire those aged 65 or over during the summer months before the new rules took effect.

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