The level of unemployment in the three months leading up to May has risen to 2.38 million, figures from the Office for National Statistics have revealed.

This puts the number of unemployed people at the worst figure since 1995, with young job hunters shown to be especially affected by the recession.

Youth unemployment is now at a 16-year high as 17.3 per cent of people aged between 18 and 24 are not in a job, up from 15 per cent in February.

"On the basis of these numbers, we reaffirm our forecast that unemployment will peak at around 3.2 million next year," commented David Kern, chief economist at the British Chambers of Commerce.

He added that the figures reflected that although the recession may be easing, unemployment is continuing to rise "at a rapid pace".

The government is set to launch a review into the default retirement age, which will take place a year earlier than planned and could see people being able to work beyond the age of 65.