Thursday, January 19, 2012

U.K. unemployment rose to the highest rate in 16 years

World Economic outlook U.K. unemployment rose to the highest rate in 16 years in the quarter through November, deepening concerns Britain is heading for another recession as turmoil in the euro area damps the global economic outlook.

The unemployment rate based on International Labour Organization methods rose to 8.4 percent, the highest since January 1996, from 8.1 percent in the three months through August, the Office for National Statistics said today in London. The number of people claiming jobless benefits rose for a 10th month to 1.6 million, the most since January 2010.

The World Bank cut its global growth forecast by the most in three years today, saying the economy has entered a “dangerous period.” In the U.K., the impact from the euro-area crisis is being compounded by Prime Minister David Cameron’s budget cuts, which are damping consumer confidence and will lead to about 700,000 job cuts through early 2017.

“The outlook for the labor market is pretty dismal,” said Nida Ali, economic adviser to the Ernst & Young ITEM Club. She expects unemployment to rise to 9.3 percent in a year and the number could be even higher “if one of the more negative outcomes of the euro-zone crisis were to materialize.”

ITEM Club said Jan. 16 that Britain has slipped back into a recession and Europe’s inability to end the debt crisis has had a “debilitating effect” on the U.K. Royal Bank of Scotland Group Plc said last week it will close its equities and corporate-finance units, cutting as many as 3,500 jobs, while Premier Foods Plc, the maker of Hovis bread, plans to eliminate 600 positions.

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