Unemployment has risen to 2.47m, its highest level in 14 years, with young people likely to be hit hard.
According to BBC calculations based on ONS data, the unemployment rate among 16-24 year olds rose last month to 19.1%, with about 928,000 people in that age range classed as unemployed.
BBC News talks to some of those affected by employment issues.
NINA: 'I HATE BEING THOUGHT OF AS A LAZY LEECH'
"I'm probably getting into the hundreds of applications for permanent jobs... but less than 10% of them reply. I'm left hanging in the air."
Nina Henson is 24 and has been unemployed since January when a temporary job at Argos ended. Before that she had worked as a manager at a gaming company which went into liquidation.
She lives in Swindon in Wiltshire, which has seen unemployment rise by 227% in the last 12 months.
After six months claiming Jobseeker's Allowance (JSA), Nina was put on the government's New Deal scheme. The 13-week course aims to find a prospective employer who will give her a work placement, but there is no guarantee of a job.
"I haven't been told what happens at the end if there's no job. The uncertainty makes me apprehensive. Where do you go? What happens next?"
Nina says people tell her she has become unemployed at the worst possible time because of the recession, and that she is in one of the worst possible towns to be searching for a job.
"I hate being thought of as a lazy leech on society. I feel like I'm trying to climb over a wall that I can't see the top of."
KIERAN: 'EVEN 'BASIC' JOBS NEED YEARS OF EXPERIENCE'
"I'm still having real trouble finding a job. Even rather 'basic' jobs seem to require years of experience to even be considered."
Kieran Mullholland is 23 and graduated from university in June 2008 with a physics degree.
Kieran Mulholland is returning to study so he can get more qualifications
He has lost count of how many jobs he has applied for, but says it is at least two a week. He has returned to live with his parents in Fareham, Hampshire, during his search.
"It does make me think that maybe the government's 50% of people in higher education policy isn't worthwhile, or even practical."
Kieran says he was told by his Job Centre to apply for non-graduate jobs, but found his lack of work experience a stumbling block.
Now he has decided to apply instead for a masters course which his parents will help him pay for. He feels he is not employable enough with a BA degree alone.
"From the feedback I received, it seemed that for these graduate jobs there was always someone more qualified."
MARK: 'HOW CAN A FRESH GRADUATE COMPETE?'
"I can't remember a time when I wasn't applying for a job. It's almost like a full-time job filling in application forms."
Mark Smith graduated in July with a good degree and after a successful placement at a large Swiss investment bank. He lives in Worthing in West Sussex. He has been applying for jobs since his first term at university.
Mark Smith's banking ambitions have been hit by the credit crunch
The credit crunch hit just as Mark finished his placement at Credit Suisse, where he had been hopeful of securing a job after graduation. But as soon as US investment bank Lehman Brothers collapsed, all job prospects disappeared.
"Other banks are being flooded by analysts with one or two years' experience, how can a fresh graduate compete against that? It's a massive mess and a real challenge."
He is doing part-time voluntary work as a youth worker at his local church while he continues his job search.
"I honestly believe I can do it. Now I've tasted what I want to do it's hard to lower my expectations."
BEN: 'UNEMPLOYMENT IS UTTERLY SOUL DESTROYING'
"Unemployment is utterly destroying. You end up getting into a ridiculous pattern and staying up until three in the morning, then getting up when you feel like it and it just perpetuates itself."
Ben Gillett is 21 and has been unemployed for over a year. He was working on the production line at BMW in Swindon but was laid off because of a fall in workload. He has been looking for work ever since.
He has now been put on the government's New Deal scheme and has a placement with Jury's Inn as a night porter, which gives him an extra £15 a week on top of the JSA.
"I'm not doing too badly and the supervisors appreciate my work. I'm working as hard as I can and hope I'll get a job at the end of it."
Ben says the New Deal scheme has been a good way for him to get in touch with an employer without having to do more application forms, and get himself back into a proper routine.
"If I don't get the job in a couple of months at the end of the placement, it'll be a bit more of the course, then back through the system again."