Unemployment in the UK during the three months to February jumped to the highest level since 1997 as the global recession forced companies to cut headcounts. At the same time, the British economy's deficit ballooned to the largest level since World War II.
Data released by the Office for National Statistics showed Wednesday that the number of unemployed people increased 177,000 to 2.10 million in the three months to February, the highest level since the labor party came into power in 1997. It was also the biggest quarterly rise since 1991. The ILO jobless rate rose to 6.7% from a revised 6.1% in the previous quarter.
The employment level was 29.27 million in the three months to February, down 126,000 from the three months to November and down 227,000 on a year earlier.
It is notable that the biggest decline in employment levels over the last three months has occurred amongst those aged 16-24 which accounted for almost 75% of the fall, with much smaller losses in older age groups, Commerzbank analyst Peter Dixon said.
The analyst added that this raises the likelihood that the Chancellor Alistair Darling will announce measures designed to tackle the lack of job opportunities for young people in his budget speech due today.
According to the findings of the Operational Efficiency Programme released by the HM Treasury on Tuesday, there is a scope for GBP 15 billion of efficiency savings in the budget. In its pre-budget report, the government had increased the target for the current spending review period to GBP 35 billion savings. Economists expect government borrowings in the range of GBP 150 billion to GBP 175 billion. This would lift borrowings to 12% of GDP for each of the coming two years. Darling is also expected to downwardly revise the GDP forecast for the British economy.
Meanwhile, the number of people claiming jobless benefits was 1.46 million in March, an increase of 73,700 over the previous month and up 672,100 over the year. The ONS said claimant count has not been higher since September 1997. However, it rose less than the expected increase of 116,000. The claimant count rate rose to 4.5% in March from 4.3% in February.
The annual rate of growth in average earnings including bonuses was 0.1% in the three months to February. This is the lowest figure since comparable records began in 1991 and is down from 1.7% in the three months to January. The fall in the growth rate was mainly due to lower bonuses in the financial sector, the ONS said.
The corresponding annual growth rate excluding bonuses was 3.2% in the three months to February, the lowest figure since comparable records began in 2001. In the three months to January, it has grown 3.5%.
The redundancies level for the three months to February was 270,000, up 45,000 from the previous three months, the highest figure since records began in 1995.
Further, the statistical office said job vacancies dropped 68,000 to 462,000 in the three months to March, marking the lowest figure since comparable records began in 2001. The ONS noted that most sectors have shown falls in vacancies over the quarter with the largest falls occurring in distribution, hotels and restaurants and finance and business services.
Manufacturing productivity in the three months to February was down 7.8% compared with a year earlier, while the unit wage costs increased 10%. During the same period, 139,000 lost their jobs in the manufacturing sector.
A separate report from the ONS showed that the country's deficit or public sector net borrowing rose to GBP 90.0 billion in the financial year 2008/09. This was a GBP 55.3 billion higher net borrowing than in the same period of 2007/08, when there was net borrowing of GBP 34.6 billion.
The public sector net cash requirement during the same period was GBP 59.9 billion, up GBP 38.3 billion from the previous year.
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