Britain under pressure after sharp rise in welfare claims
The number of people claiming jobless benefit rose by 37,100 last month, the Office for National Statistics said yesterday, the largest jump since May 2009.
Some of the rise was still due to a change in benefit rules, though this could not explain all of the increase, the office said.
Britain’s labour market has been surprisingly robust during the financial crisis and employment has risen despite a sluggish economic recovery.
However, surveys have indicated that firms are scaling back hiring plans, raising doubts about the ability of private companies to make up for public-sector job losses caused by the government’s spending cuts, aimed at erasing the budget deficit.
Chancellor of the exchequer George Osborne has firmly rejected all calls to slow his austerity drive, pledging to push on with reforms to support businesses and job creation.
Yesterday, the government announced 11 more low-tax, light-regulation enterprise zones which could create up to 30,000 jobs by the time of the next election.
With room for more government spending limited, any boost for the economy is likely to come from the Bank of England, where more policymakers considered fresh asset purchases and all calls for higher rates were ditched.
Rising unemployment is likely to further dent shaky consumer morale, already hit by high inflation, low wage rises and the riots which hit a number of cities last week.
The number of people without a job rose by 38,000 in the three months to June to 2,494,000, and the jobless rate unexpectedly rose to 7.9%.
“The labour market data is unambiguously bad,” said Tom Vosa, economist at National Australia Bank.
Average weekly earnings growth including bonuses rose 2.6% in the three months to June compared to last year.
Excluding bonuses, however, pay only increased by 2.2%.
