Britain’s Conservative-Liberal Democrat government intends to whittle down a record budget deficit to almost nothing over five years and will next week outline how some 80 billion pounds of cuts will be spread across departments.

The austerity measures are expected to cost hundreds of thousands of public sector jobs, and a report by consultancy PriceWaterhouseCoopers has suggested just as many private sector jobs are at risk as government contracts are axed.

The coalition says a strong private sector recovery should help to fill the gap created by government cuts.

“The labor market data may well remain mixed in the very near term, but we expect a clear deteriorating trend to increasingly emerge,” said Howard Archer, economist at IHS Global Insight.

“We suspect that unemployment is headed up over the coming months as a consequence of slower, below-trend growth, rising business caution and public sector jobs being increasingly pared.” The number of people claiming unemployment benefits rose by 5,300 last month — the biggest rise since January, following an upwardly revised 3,800 increase in August, Wednesday’s figures from the Office for National Statistics (ONS) showed.

An unexpected dip in a wider measure of unemployment masked a persistent decline in the number of people in full-time work and a third consecutive fall in vacancies, suggesting firms remain reluctant to take on staff due to a fragile recovery.

Britain’s economy bounced back strongly from an 18-month recession, growing a robust 1.2 percent from April to June although that was largely due to government spending.

Recent surveys indicate business activity has slowed markedly since then, raising the possibility that the Bank of England will have to do more to support the recovery.

The ONS said the number of people without a job on the internationally comparable ILO measure fell by 20,000 to 2.448 million in the three months to August, taking the jobless rate down to 7.7 percent — a 15-month low.

Employment, meanwhile, rose by 178,000 to 29.158 million over the same period, but that was mainly due to a 143,000 rise in the number of part-time workers, while the number of people employed by companies in full-time jobs fell by 17,000.

Wage growth also remained muted, rising by 1.7 percent in the three months to August compared with a year ago — well below half the current rate of retail price inflation.

Tight personal finances and worries about job security have depressed consumer sentiment to its lowest level since the recession.

“Households have had to contend with falling real wages for much of the past three years, and there is likely to be no let up next year either with the VAT increase keeping inflation high,” said Andrew Goodwin, senior economic adviser to the Ernst & Young ITEM Club.

“In contrast to previous recoveries, this is going to prevent consumers from playing any significant role.”