November 16, 2011 / 9:35 AM / 8 years ago

Jobless rate hits 15-year high

LONDON, NOV 16 - Unemployment in Britain hit its highest in 15 years and the number of young people out of work soared to a record of more than 1 million, adding to pressure on the government to do more to support a faltering economy.

A pedestrian walks past an employment centre in London August 17, 2011. REUTERS/Suzanne Plunkett

The coalition government’s room for manoeuvre is limited by its pledge to erase the country’s huge budget deficit through a tough austerity plan, which includes axing an estimated 400,000 public sector jobs.

The unemployment data provided a suitably gloomy opening to a day likely to be dominated by lower growth forecasts from the Bank of England when it presents its quarterly inflation report at 10:30 a.m.

Employment minister Chris Grayling put the blame on Europe, Britain’s main trading partner, and said the government must stick to its austerity measures, which it claims have made Britain a safe haven in the debt crisis.

“These figures are bad news. They are, I’m afraid, the consequence of what we’re seeing in the euro zone.

“If you go back four months, unemployment was falling, youth unemployment was lower than 900,000. We’ve seen a big slowdown in the economy I think as a result of the crisis elsewhere.

“We must not divert from the reduction of the deficit ... we have to do everything we can to support and encourage growth here — and that will be a big focus of the autumn statement in two weeks time,” he said, referring to a policy statement due from finance minister George Osborne on November 29.


Osborne has ruled out major changes to the deficit reduction plan in the autumn statement, which is likely to include mainly supply-side measures aimed at improving the country’s long-term growth prospects.

The Office for National Statistics said the number of people without a job on the wider ILO measure grew by 129,000 in the three months to September to 2.622 million — the highest level since July-September 1994.

The jobless rate rose to 8.3 percent, compared with forecasts for a reading of 8.2 percent. That was the highest rate since April-June 1996.

The number of young people out of work ticked up to 1.016 million, rising above the politically sensitive 1 million mark for the first time since comparable records began in 1992 and taking the unemployment rate among eligible 16- to 24-year-olds to 21.9 percent.

“The big picture is unemployment is rising and the number of jobs is falling while rates of pay growth is easing back as well,” said Philip Shaw, chief economists at Investec.

“In truth though, the figures could have been worse and are slightly better than expected; until the UK economy regains some traction it’s likely that unemployment will continue to rise,” he added.

There were some crumbs of comfort.

The number of people claiming jobless benefit rose by 5,300 last month, far below analysts’ forecasts of a rise of 20,000. That was the smallest monthly rise in claimant count since February.

But average weekly earnings growth including bonuses weakened to 2.3 percent. Analysts had forecast a pick-up of 2.5 percent. Excluding bonuses, pay grew by 1.7 percent.

And wage growth is still well below inflation, which stood at 5 percent in October, adding to pressures on consumers.

The government is banking heavily on the private sector to create new jobs as public spending cuts are kicking in. However, recent surveys have found that job losses in the public sector are likely to continue outpacing hiring by businesses.

The Bank of England is expected to highlight the potential need for more quantitative easing in the coming months to revive the economy, which has been badly hit by sluggish consumer spending and a debt crisis engulfing its main trading partner, the euro zone.

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