King Faces Jobless Specter Overshadowing Inflation Boon in 2012

Rising U.K. unemployment is threatening to cancel the benefit of cooling inflation on consumer spending and keep the recovery in check this year, said economists at Citigroup Inc. and ING Group.

While Bank of England Governor Mervyn King says an easing of the price squeeze on consumers is one of the “good pieces of news” for 2012, its impact on household spending may be muted. Unemployment has risen to the highest in 16 years, wage growth is lagging behind inflation and consumer confidence is close to a record low.