The Government has been told to step up its efforts to combat long-term unemployment and reduce the number of households with no-one at work.

A European Commission economic survey published this week praises Britain's labour market performance as "among the best in the EU in recent years".

But it said the problem of concentrated areas of unemployment in Britain, including Brighton and Hastings, stood out. The upbeat report predicted "solid growth" in the EU and said an annual economic growth rate of around three per cent should be a realistic prospect in the wake of an increasingly robust economic recovery in all member states.

In the report, the Commission warns, a nine per cent unemployment rate across the 15 member states remained unacceptably high. It says: "The present degree of non-employment is the source of large economic and social costs. The return to full employment remains therefore the key objective of economic and social policy and implies in particular the creation of jobs in the services sector, an increase in the rate of female employment and a greater participation of older workers."

Economic affairs Commissioner Pedro Solbes, unveiling the report for Euro MPs in Strasbourg, said the document set out a strategy designed to deal with four key challenges facing the member states: including, a return to full employment; the transition to a knowledge- based society; the impact of a rapidly-ageing population and the improvement of social cohesion.

The document said: "Present circumstances, with the EU economy entering a virtuous circle of vigorous output growth, high confidence and strong employment creation, offer a golden opportunity to make significant headway in the fulfilment of the Union's ambitions."

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