Sean O'Grady: As the number of jobless continues to soar collapsing confidence will create vicious circle

Even though yesterday's unemployment figure didn't burst through the two million mark, as many expected, there is little comfort in that. For there is little doubt that it will do so the next time the numbers are published. What's more it seems a racing certainty that the dole queues will lengthen to three million by the end of this year. Unemployment tends to lag behind the economy's fortunes, so the jobless numbers will not decline significantly until the economic recovery is well under way – which could take many years.

The consequences for some families will be shattering. It will mean the loss not only of their main income but also the roof over their heads and the burden of negative equity, if they avoid bankruptcy. A number of charities have predicted a steep rise in marriage break-ups as the recession bites deeper and the Home Office and the Financial Services Authority fear a wave of fraud and other crimes on the back of the biggest dole queues since the 1980s. Some wonder about political extremism and social unrest.

These figures are grim because of what they tell us about the underlying trend. Analysis by Citi Group economists tells us that the jobless total has risen by nearly 400,000 people since the recession got underway last autumn – a slightly faster pace than in any of the three big post-war recessions.

In a way, this recession seems to combine all the worst aspects of the previous three downturns. We had the same huge increase in the oil price that we suffered in the early-to-mid 1970s (although that has rapidly disappeared); the same hit to manufacturing seen in the Thatcher-inspired "shakeout" of the early 1980s, which hit the North especially badly; and the same national housing crash we saw in the early 1990s. Plus, of course, a restriction in bank lending that has not really been seen since the early 1930s. Quite a cocktail.

So the omens are not encouraging. British jobs, for British or any other kind of workers, are thin on the ground. Vacancies are at an all-time low, down 30 per cent on 2008. The number of redundancies is up 133 per cent on last year. The most recent announcements of big job cuts, such as the 850 announced by Ford last week, will not show up in the figures for a few months. Larger employers have to give notice for consultation on compulsory redundancies and have otherwise tried to delay actually firing people, although the impact will become apparent in the spring and summer. The nation has got to the point in the recession where most people know of someone who has lost their livelihood, in a way they didn't a year ago, and this is probably the biggest single factor in shredding that most fragile, elusive and precious of commodities – confidence.

And the vicious cycle of rising unemployment and collapsing confidence is one that governments have traditionally found it extremely difficult to break.