Rising British unemployment sparks new fears over economy

17th August 2011, Comments 0 comments

Britain's jobless total has risen unexpectedly for the first time since January, data showed Wednesday, sparking fresh doubts over the economy which is already buckling under deep public spending cuts.

The number of unemployed jumped 38,000 to 2.49 million in the three months to June, the Office for National Statistics announced in a statement.

That was the biggest increase since May 2009 and the first since the start of the year. The figure also surprised economists who had pencilled in a drop of about 10,000 people.

The bleak data represents a major blow for Conservative Prime Minister David Cameron's coalition government which had hoped that the private sector would create enough jobs to offset heavy losses in the public sector.

Finance minister George Osborne admitted on Wednesday that the unemployment figures were "disappointing" but not "entirely unexpected" amid ongoing global economic turmoil.

"With what is going on in the world economy and with world markets, they are not entirely unexpected," Osborne said.

"There is some good news that employment, those in work, is still going up. We are creating jobs in this economy as well as jobs being lost."

Britain's struggling economy grew by just 0.2 percent in the second quarter, after flatlining over the previous six months.

"The UK's latest unemployment report for June was not pleasant reading," said research director Kathleen Brooks at trading site Forex.com.

"This is worrying since growth is slowing at the same time as the government is embarking on its fiscal consolidation programme."

In another piece of bad news, the ONS added that the number of people claiming jobless benefits increased by 37,100 in July to reach 1.56 million. That was also the biggest monthly rise since May 2009.

The number of unemployed women rose 21,000 to 1.05 million in the three months to June which was the highest level since May 1988.

The total of unemployed 16 to 24 year-olds, meanwhile, increased by 15,000 to 949,000.

"The labour market has decisively turned -- this is the legacy of the weak growth performance of the past year," said Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club.

He added: "Further rises in unemployment are likely, given that the pace of public sector job cuts will accelerate."

The ONS said the jobless rate rose to 7.9 percent in the three months to June from 7.7 percent in the three months to May. Market forecasts had been for an unchanged reading.

Britain's economic slowdown, after escaping from recession in 2009, had been widely forecast as the coalition pursues tough measures to slash a huge budget deficit, in the belief this will eventually give the economy room to grow.

Trade union leaders and the opposition Labour party have called for the Conservative-Liberal Democrat government to reconsider its painful cuts in public expenditure.

© 2011 AFP

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