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.
