U.K. Youth Unemployment Climbs Above 1 Million for First Time Since 1992
U.K. unemployment jumped in the third quarter as the number of young people looking for work climbed above 1 million for the first time in at least 19 years.
Unemployment as measured by International Labour Organization standards rose by 129,000 to 2.62 million, the most since 1994, the Office for National Statistics said in London today. The jobless rate climbed to a 15-year high of 8.3 percent. Unemployment-benefit claims rose 5,300 to 1.6 million in October. Economists forecast an increase of 21,000, according to the median of 24 estimates in a Bloomberg News survey.
The figures heap pressure on Prime Minister David Cameron to do more to boost an economy at risk of sliding back into recession as Europe’s escalating debt crisis convulses financial markets. The Bank of England cut its growth forecasts today, saying output is likely to remain flat until the middle of 2012.
“The unemployment number ticking up so much is quite dramatic and an 8.3 percent unemployment rate is punchy,” said Peter Dixon, an economist at Commerzbank AG in London. “People are finding that it’s grim. It’s tough to find a job.”
The pound was down 0.3 percent at $1.5771 as of 2:12 p.m. London time. The yield on the benchmark 10-year gilt fell 1 basis point to 2.14 percent.
The increase in unemployment in the third quarter was the largest since the depths of the last recession in mid 2009 as the number of people in work fell by 197,000, the statistics office said. Claims for unemployment benefit rose for an eighth month in October, leaving the rate at 5 percent. Jobless claims in September climbed by 13,400 instead of the 17,500 previously reported.
In the three months through September, unemployment among 16-24-year-olds increased by 67,000 to 1.02 million, the highest level since comparable records began in 1992. The jobless rate in that category was a record 21.9 percent. More than a quarter of young jobseekers had been out of work for more than a year.
“Levels of youth unemployment have reached crisis point,” said Matthew Freeman, commercial manager of skills and young people at Working Links, an organization that delivers programs to help get people back to work. “With over a million young people out of work, we risk creating a lost generation of young Britons.”
The U.K. government will pay small companies a 1,500-pound ($2,370) incentive to take on apprentices, Business Secretary Vince Cable announced today. Employment Minister Chris Grayling said the unemployment figures reflect the damage being inflicted by the euro-region crisis and pledged “additional measures” to support growth and create jobs later this month.
“The news that a million young people are standing idle must shock this out-of-touch prime minister into an economic rethink, and fast,” he said in a statement.
Bank of England Governor Mervyn King said the increase in unemployment was unsurprising given the deterioration in economic prospects since August.
“It’s for the government to respond to that and we will do our part to restore macroeconomic stability,” he told a news conference in London after the bank published its quarterly outlook. “I have immense sympathy with people who are suffering. These people were not responsible for the crisis and they are suffering enormously as a result of it.”
The Chartered Institute of Personnel and Development said on Nov. 14 that an index of U.K. employers’ hiring intentions weakened as the crisis in the euro area damped demand for labor.
While the fourth quarter may show flat or “modest” growth, “if things are going to get worse, I think they’ll get worse in the first half of next year, when we’ll get more of the the effects of the euro crisis over here,” Commerzbank’s Dixon said.
Europe’s economic expansion failed to accelerate in the third quarter, with gross domestic product growing 0.2 percent, as the region braces for a recession sparked by the debt crisis. In the U.K., surveys this month showed manufacturing output shrank in October and services growth cooled.
BAE Systems Plc, Europe’s largest defense company, said Sept. 27 it will cut about 3,000 jobs in the U.K. to trim costs and slow production of Eurofighter planes.
Average-earnings growth slowed to 2.3 percent in the three months through September from 2.7 percent in the period through August, underlining the pressure on wages even though consumer- price inflation is running at 5 percent. Excluding bonus payments, incomes growth slowed to 1.7 percent from 1.8 percent.
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