(Xinhua) Some 3.5 million European Union (EU) citizens will lose their jobs this year due to the economic crisis, an EU report said on Tuesday.

‘As business and consumer confidence fell sharply in December and dropped again in January, further deterioration in the labor market situation is foreseen for the months ahead,’ the European Commission said in its first monthly survey of the EU job market.

The report forecast employment growth in the EU will turn negative in 2009, with overall employment contracting by 1.6 percent or some 3.5 million jobs, while the average EU unemployment rate is set to increase by about 2.5 percentage points in the coming two years.

The metal and machinery, motor industry, financial services and transport and storage sectors have been hit hardest. A net loss of more than 100,000 jobs was announced in these sectors in the four months from October 2008 to January 2009.

However, wholesale and retail trade appeared to be the most resilient sector, with significant new jobs announced over recent months.

Unemployment in the EU is expected to rise to nearly ten percent by the end of 2010 from seven percent predicted for 2008, the report said.

It warned young people and those on temporary employment contracts have been the first to be hit by the rise in unemployment, but elderly people, foreign nationals and low-income households are also likely to be at the forefront of those most affected by the wider impacts of the downturn.

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