The number of people receiving jobless benefits rose 2,400 to 1.46 million, the Office for National Statistics in London said today. The median of 25 forecasts in a Bloomberg News survey was for a drop of 3,000. Unemployment based on International Labour Organization methods rose by 44,000 in the fourth quarter to 2.49 million.
Prime Minister David Cameron is counting on hiring at private companies as his government embarks on budget cuts that will cost 330,000 public-sector jobs over the next four years. Bank of England Governor Mervyn King said today’s figures underscore the “significant margin” of spare capacity in the economy that is helping to counter inflationary pressures.
“The claimant count is going sideways, compared with falls during 2010, and that’s probably confirming that economic growth has slowed,” said Alan Clarke, an economist at BNP Paribas SA in London. “If the economy slows further this year due to fiscal tightening, we are facing a second wave of job losses.” Unlikely to be Smooth’
Britain’s recovery went into reverse in the fourth quarter, when the economy contracted by 0.5 percent as freezing weather hampered activity. While recent surveys suggest growth returned in January, King said today the recovery is “unlikely to be smooth” and some economists say the private sector will struggle to create enough jobs to keep unemployment from rising further this year.
Employment fell by 68,000 to 29.1 million in the fourth quarter from the third, the statistics office said. Part-time work accounted for all of the increase in employment over the past year.
The ILO unemployment rate rose to 7.9 percent in the fourth quarter from 7.7 percent in the third, the statistics office said. That compares with 10 percent in the euro region, 9 percent in the U.S. and 4.9 percent in Japan. The level of unemployment was 6,000 lower than in the September-November period.
‘Great Regret’
A third of those unemployed had been out of work for more than 12 months. Joblessness among 16-24-year-olds reached 965,000 in the fourth quarter, or 20.5 percent. Both measures were the highest since comparable records began in 1992.
Cameron and opposition Labour Party leader Ed Miliband clashed over the jobless increase in Parliament today, with Miliband accusing the government of “betraying a whole generation of young people.”
“Of course today’s figures are a matter of great regret,” Cameron said. “Youth unemployment has been a problem in this country for well over a decade, in good years and in bad. What we have to do is sort out all the things that help young people back into work.”
The increase in the number of people claiming jobless benefits last month left the claimant-count rate unchanged at 4.5 percent. Claims fell by 3,400 in December instead of the 4,100 drop initially reported.
Subdued Pay
Today’s figures showed wage settlements remain subdued, supporting the Bank of England’s argument that above-target inflation isn’t fueling demands for higher pay.
Average weekly earnings growth including bonuses slowed to 1.8 percent in the fourth quarter from 2.1 percent in September through November. Basic pay growth was unchanged at 2.3 percent.
Consumer-price inflation quickened to a 26-month high of 4 percent in January, twice the 2 percent target, the statistics office said yesterday. Retail-price inflation, the benchmark for most U.K. pay deals, accelerated to 5.1 percent.
King, presenting the central bank’s quarterly forecasts today, said he saw no evidence of a pickup in wage growth as he defended his view that the surge in inflation will prove temporary.
Policy makers held their key interest rate at a record low of 0.5 percent and the bond-purchase plan at 200 billion pounds ($323 billion) last week.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.
To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net
