The UK economy will need to grow by at least 2.5% per year, to offset impending public sector jobs cuts, with only slightly less growth having dire consequences for job prospects, according to the Chartered Institute of Personnel and Development.

According to the Office for National Statistics, the UK recorded a 34,000 fall in unemployment to 2.47m in the three months to May and a fifth successive fall in the claimant count, which was down by 20,800 to 1.46m in June, dropped by 34,000 in the three months to the end of May to reach 2.47m.

But the CIPD says the UK economy needs grow by at least 2.5% per year between now and 2015 if the private sector is to create enough jobs to more than offset impending public sector job cuts, adding that growth even slightly less than this, between 2-2.5% per year, would seriously hit overall jobs prospects.

The Office for Budget Responsibility’s (OBR) current central economic and employment forecast predicts the economy will grow by more than 2.5% each year from 2012-15, while employment levels are predicted to grow next year (2011) and continue to rise through to 2015.

The CIPD, by contrast, on only slightly more pessimistic growth assumptions, forecasts the economy will cut 300,000 jobs by 2012 before renewed job creation boosts employment by 2015 to around 100,000 but far short of the 1.3m extra jobs the coalition government is hoping for.

Dr John Philpott, chief economic adviser at the CIPD, says: “Against the backdrop of massive public sector job downsizing it doesn’t require anything like a double-dip recession to cause a serious prolonged jobs deficit, merely economic growth in the range of 2-2.5% per annum rather than the +2.5% annual growth rates the OBR expects and the coalition government is hoping for.

“A slightly milder growth outcome – which many would consider a decent recovery in output given the various strong headwinds at present facing the economy – is easily as imaginable as the OBR’s central forecast and would leave unemployment still close to 2.5m by 2015, meaning Britain faces at least half a decade of serious prolonged jobs deficit. So will, fiscal pain spur private sector jobs gain, as the coalition’s economic strategy assumes? Yes, but probably not very much and certainly not any time soon.”