UK unemployment rose to the highest rate in 16 years in the quarter through November, deepening concerns Britain is heading for another recession as turmoil in the euro area damps the global economic outlook.
The unemployment rate based on International Labour Organization methods rose to 8.4 per cent, the highest since January 1996, from 8.1 per cent in the three months through August, the Office for National Statistics said on Wednesday in London. The number of people claiming jobless benefits rose for a 10th month to 1.6 million, the most since January 2010.
Ernst & Young LLP’s ITEM Club said on January 16 that Britain has slipped back into a recession and Europe’s inability to end the debt crisis has had a “debilitating effect” on the UK Prime Minister David Cameron is counting on hiring at private companies as his government axes hundreds of thousands of public-sector jobs to tackle the budget deficit. Firms from banks to retailers are cutting jobs as the outlook deteriorates.
“The economy is not growing much and if you extrapolate that over the next six months, jobs are going to pretty hard to find,” said an economist at Commerzbank.
AG in London.
“Unemployment could become one of the main economic and political issues this year and may well be one of the triggers for more stimulus from the Bank of England.”
The pound was trading at $1.54, up 0.2 per cent from yesterday. The yield on the 10-year government bond was little changed at 1.97 per cent.
‘Huge priority’
Unemployment measured by ILO methods rose by 118,000 in the three months through November to 2.69 million, the highest since 1994. The number of people in work increased 18,000 to 29.1 million, while the employment rate declined to 70.3 per cent from 70.4 pe rcent.
Employment Minister Chris Grayling said the increase in employment showed private companies created jobs at a faster pace than the government eliminated them.
“This a huge priority for us,” he told BBC television. “Unemployment is much too high. There’s no question about that. We are taking what measures we can in extraordinarily difficult times.”
He said much of the increase in unemployment reflected full-time students looking for part-time work and women returning to the labor market after time out to look after children. The number of people classified as economically inactive fell by 61,000 to 9.29 million in the latest quarter.
‘Not looking good’
The data for December show that jobless claims rose less than economists forecast, jumping by 1,200 after a revised increase of 200 in November. Economists had forecast an increase of 7,000, according to the median of 25 estimates in a Bloomberg News survey.
“Jobless claims may have not risen by as much as expected, but it’s not looking good,” Dixon said.
While the economy grew at the fastest pace in a year in the third quarter, the Bank of England has said the fourth quarter will probably not see any expansion. The central bank is in the final month of a £75-billion ($115 billion) round of bond purchases to boost growth, and economists at Citigroup Inc. and Nomura International Plc expect a further expansion of stimulus next month.
Premier Foods Plc, the maker of Hovis bread, said yesterday it plans to cut 600 jobs, five per cent of its workforce, in a bid to save £40 million by next year while gift retailer Past Times collapsed with the loss of more than 500 jobs.
Unemployment among 16-24-year-olds climbed by 52,000 to 1.04 million, or 22.3 per cent, the highest rate since comparable records began in 1992.
Pay squeeze
Wednesday’s report showed that annual pay growth slowed to 1.9 per cent in the quarter through November from 2.1 per cent in the three months through October, remaining well below the pace of inflation. Weekly pay excluding bonuses accelerated to 1.9 per cent from 1.8 per cent. Data yesterday showed inflation slowed to 4.2 per cent in December, compared with 4.8 per cent the previous month.
The data also showed that 988,000 workdays were lost in November, the most since 1989. The loss was largely due to a strike by public workers protesting government cuts.
