The Government has been urged to create 5,000 new internship placements in small businesses to tackle “soaring” graduate unemployment.

The Federation of Small Businesses (FSB) said £3 million should be allocated to market and develop thousands of internships and jobs this year.

The move would save the Government £600 for each graduate on such a scheme as they would not be claiming any unemployment benefit, said the federation.

Chairman John Wright said: “Graduate unemployment is set to soar to unprecedented levels this year as businesses struggle to make ends meet and cut back on recruiting university leavers.”