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    UK jobless posts biggest rise in 17 years

    Reuters
    15.10.2008 - 12:35 | Son Güncelleme:

    British unemployment posted its biggest rise in 17 years in the three months to August as the jobless rate rose to its highest level in eight years, official data showed on Wednesday.

    The Office for National Statistics said the ILO measure of unemployment rose by 164,000 in the three months to August.

    That took the jobless rate up half a percentage point to 5.7 percent, also its biggest jump since 1991, slightly higher than expected.
    "Simply awful," said Alan Clarke, UK economist at BNP Paribas.

    But the number of Britons out of work and claiming jobless benefits rose slightly less than expected in September, by 31,800 following an upwardly revised increase of 35,700 in August. That took the claimant count jobless rate up to 2.9 percent, its highest level in January 2007.

    And in a sign that high headline inflation is not feeding into wages as Bank of England policymakers have feared it would, annual average earnings growth slowed to 3.4 percent in the three months to August, its weakest in 5 years.

    Downward pressure on wage growth could grow in the coming months as ailing banks are unlikely to be paying out huge bonuses this year and as the jobless count rises.

    One Bank of England policymaker, David Blanchflower, has predicted the ILO jobless level, currently at 1.792 million people, could hit 2 million by Christmas.

    Employment has also fallen by 122,000 in the three months to August, the biggest drop since February 1993.

    Construction and banking firms have been at the forefront of companies shedding staff in the face of the economic slowdown and housing market slump.

    "It's a bad picture," Britain's employment minister Tony McNulty told Sky television. "But the job is to look forward and see how we can deal with any dip in employment rather than talking about the causes."

    The BoE cut interest rates by 50 basis points to 4.5 percent last week in an emergency move to shore up the economy and most analysts expect further rate reductions in the coming months.

    "The threat of a pick-up in pay growth has all but disappeared," said Vicky Redwood, UK economist at Capital Economics. "With inflationary pressures outside of the labor market now easing markedly too, the way is clear for aggressive interest rate cuts."


     

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