Wednesday, March 18, 2009

UK jobless tops 2 million

LONDON - UNEMPLOYMENT in Britain rose to 6.5 per cent in January, with the number of people out of work reaching its highest in 12 years, the government said on Wednesday.

The unemployment rate rose from 6.3 per cent for the three months ending in December, leaving more than 2 million people jobless for the first time since 1997 across the country, the Office for National Statistics said.

The Office for National Statistics figures showed the claimant count rose by 138,400 in February, after an upwardly revised increase of 93,500 in January.

That was well above analysts' forecasts for a rise of 85,000 and the biggest increase since comparable records began in 1971. The claimant count rate hit 4.3 per cent, the highest since 1999.

'It's clear that the data is absolutely dreadful,' said Amit Kara, UK economist at UBS. 'Going forward we expect unemployment to rise well in excess of three million through next year.'

The IMF expects the British economy to contract by a brutal 3.8 per cent this year and shrink a further 0.2 per cent in 2010, at a time when most of its partners are seen recovering.

Unemployment is likely to rise even further this year because the figures tend to lag developments in the economy.

Bank of England policymaker David Blanchflower thinks there could be one in 10 people out of work by the end of this year.

'Horrendous,' said George Buckley, chief UK economist at Deutsche Bank. 'It does take about six months before changes in GDP have their maximum effect in the jobs market.'

The FTSE 100 index of leading shares and the pound fell after the data, which were much weaker than markets expected. -- AP, THOMSON REUTERS.

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