U.K. Jobless Rate Rises to 16-Year High of 8.4%
U.K. Unemployment Rate Rises to Highest in Almost 16 Years
Chris Ratcliffe/Bloomberg
Job seekers use the phone to check for vacancies while at a job centre in London.
Job seekers use the phone to check for vacancies while at a job centre in London. Photographer: Chris Ratcliffe/Bloomberg
U.K. 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 percent, the highest since January 1996, from 8.1 percent in the three months through August, the Office for National Statistics said today 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 Jan. 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 U.K. 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 Peter Dixon, 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 $1.5382 as of 10:12 a.m., up 0.2 percent from yesterday. The yield on the 10-year government bond was little changed at 1.97 percent.
‘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 percent from 70.4 percent.
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-pound ($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 (<PFD>), the maker of Hovis bread, said yesterday it plans to cut 600 jobs, 5 percent of its workforce, in a bid to save 40 million pounds 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 percent, the highest rate since comparable records began in 1992.
Pay Squeeze
Today’s report showed that annual pay growth slowed to 1.9 percent in the quarter through November from 2.1 percent in the three months through October, remaining well below the pace of inflation. Weekly pay excluding bonuses accelerated to 1.9 percent from 1.8 percent. Data yesterday showed inflation slowed to 4.2 percent in December, compared with 4.8 percent 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.
To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
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