U.K. Unemployment Rises

U.K. unemployment rose to the highest level in almost two years in September as the prospect of a recession and the global financial crisis prompted a spate of job cuts from banks to construction companies.

Claims for jobless benefits rose 31,800 to 939,900, the highest since November 2006, the Office for National Statistics said today in London. Economists predicted an increase of 36,000, according to the median of 30 forecasts in a Bloomberg News survey. The increase for August was 35,700, the most since 1992.

The unemployment rate in the three months through August rose to 5.7 percent, the most since 2000, the statistics office said. That compares with 7.5 percent in the euro region, 6.1 percent in the U.S. and 4.2 percent in Japan. The number of unemployed people rose 164,000 from the previous three months, the biggest increase since the early 1990s.

The Bank of England cut its benchmark rate by half a point to 4.5 percent last week in an emergency action with other central banks across the world to prevent financial markets from collapsing.

Banks may cut 62,000 staff in London by the end of next year to reach the lowest level since 1998, the Centre for Economics and Business Research said in a report on Oct. 13. Job openings in the city's financial-services industry tumbled 14 percent in September, the third consecutive monthly decline, according to a survey by recruitment firm Morgan McKinley released today.

HSBC Holdings Plc, Europe's largest bank by market value, is cutting about 550 U.K. jobs, and Zurich-based UBS AG said Oct. 1 it would eliminate 2,000 positions in its European investment banking unit. Bellway Plc, the U.K.'s second-best performing homebuilder this year, said yesterday it was in the process of cutting 35 percent of its workforce.

Economic growth stalled in the second quarter, ending the longest stretch of uninterrupted expansion in a century. The International Monetary Fund predicts the U.K. economy will contract 0.1 percent next year after forecasting growth of 1.6 percent six months ago.

U.K. Unemployment Rises

TradingEconomics.com, Bloomberg.com
10/15/2008 5:25:38 AM