London -- Recession-hit Britain took a fresh blow Wednesday as official data showed two million people claiming jobless benefits for the first time since the Labour government came to power in 1997.

Britain's unemployment rate jumped to 6.5 percent in the three months to January, also a 12-year high, the Office for National Statistics said.

The claimant count soared 138,400 in February, the biggest monthly gain since records began in 1971 as Britain endures its first recession in 18 years.

The thirteenth consecutive monthly rise in claims was far higher than the market consensus estimate of 87,500, according to Dow Jones Newswires.

Prime Minister Gordon Brown said it was a matter of "personal regret" that any person should lose their job but he insisted Britain was in better shape regarding unemployment than Germany, Japan and the United States.

Economists were not upbeat, however.

"The unemployment data are truly awful, heightening fears about the potential depth and length of the recession" in Britain, said Howard Archer, chief European economist at IHS Global Insight.

"Unemployment smashed through the two million barrier with ease ... and it seems set to head up towards three million pretty rapidly over the coming months as the economy contracts sharply and struggling businesses look to contain their costs."

Barclays Capital analyst Varun Bhabha said that "in comparison with previous recessions, the path of claimant count unemployment over the past few months seems to point towards a far sharper and faster adjustment by firms."

In an attempt to turn round Britain's fortunes, the Bank of England has in recent months slashed local interest rates to a record low 0.5 percent.

The BoE monetary policy committee voted 9-0 to cut borrowing costs, minutes of their meeting showed on Wednesday.

BoE policymakers also voted unanimously to pump 75 billion pounds (106 billion dollars or 84 billion euros) of newly-created money into the financial system in an effort to bolster demand.

Brown on Wednesday told parliament that "any person who loses their job or is in fear of losing their job, this is a matter of personal regret for me and for the whole government."

But he added: "Unemployment is higher in France, in Germany, in Japan, in America."

Germany's unemployment rate stood at 8.5 percent in January and is at a 25-year high 8.1 percent in the United States.

In its statement on Wednesday, the ONS said "the unemployment rate was 6.5 percent for the three months to January 2009, up 0.5 (points) over the previous quarter and up 1.3 (points) over the year.

"The number of unemployed increased 165,000 over the quarter and by 421,000 over the year to reach 2.03 million. The unemployment level and rate have not been higher since 1997," it added.

In an extraordinary bid to free Britain from the worst economic downturn in decades, the BoE has issued new money in so-called "quantitative easing" measures as it tries to boost lending in the crisis-hit economy.

The central bank is buying government bonds from commercial banks in the hope that the institutions will start lending again to businesses and individuals after sitting tight since the credit crisis erupted in 2007.

With British interest rates so low and having little traction, quantitative easing is seen as the next best option, modelled on the Japanese experience of the 1990s when the government there created money of its own.

The new cash is created electronically but the process has much the same effect as printing notes because it expands money supply and boosts the balance sheets of banks and institutions.

Ben Perry/AFP/Expatica