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Graduate job prospects are looking bleak as youth unemployment surges to its highest level for 15 years.

One in six of those aged 18 to 24 and one-third of those aged 16 and 17 who have already left school were unemployed in the three months to April, official figures have shown.

The number of young people claiming benefits has soared by 80% to 456,400 in the year to May and figures are set to balloon this summer as students who leave education struggle to find work.

Martina Milburn, chief executive of the Prince's Trust, said: "Youth unemployment now costs the state £23m per week in jobseeker's allowance.

"But the impact on unemployed young people - who all too often fact a downward spiral towards a loss of self-confidence and even crime - is immeasurable."

Companies have cut back on recruiting junior staff, preferring to keep existing workers who are prepared to take pay cuts or work fewer hours.

Most economists are warning that businesses are unlikely to start recruiting again until late next year.

Hetal Mehta, senior economic adviser to the Ernst & Young ITEM club, said. "It is important not to be fooled into thinking that the labour market is going to improve any time soon.

"With the economy still contracting, unemployment will continue to increase into 2011 and there will be more downward pressure on earnings."

The competition among job hunters is also much stiffer, with seven applicants chasing every job, according to figures collated by the Conservatives.

Those who struggle to clinch a first job can often find it increasingly difficult to find work, experts say, raising the risk that they will remain on jobless benefits for longer.

Young men have been worst affected, with one in five of those aged between 18 and 24 out of work.

John Cridland, deputy director-general of the Confederation of British Industry (CBI), said: "Making job cuts is the last thing that businesses want to do, and the Government must do everything it can to help firms keep people in their jobs, as well as giving advice, training and support to those who have become unemployed."