Unemployment in Britain rose by 146,000 to 1.971 million in the three months to December, the highest level since 1997 but short of analyst forecasts that it would breach the two million figure.
The ILO rate of unemployment was 6.3 per cent, the highest since 1998 according to official figures released today. Experts said the outlook for the job market remained bleak at a time when Britain was in deep recession.
"The two million mark is coming up and realistically going into 2010 it will probably be the three million mark that becomes more relevant," said Mark Miller, an economist at HBOS.
"There are few signs of joy in the labour market and nothing on the face of these data to suggest that the Bank of England won't cut rates again."
The number of people claiming jobless benefits in Britain rose by less than expected in January.
The Office for National Statistics said the claimant count rose by 73,800 to 1.233 million in January, the highest level since July 1999. That rate hit 3.8 per cent. Analysts had forecast a rise of 90,000 on the month.
"The figures are, I'm not going to hide it, very, very disappointing. We have got a lot of work to do to get through this," Employment Minister Tony McNulty told Sky News.
Average earnings in the three months to December rose 3.2 per cent from their level a year earlier, but manufacturing wage growth was its slowest on record at 2.5 per cent.
"The deteriorating labour market isn't having much of an impact on pay growth yet ... (and) falling inflation means that real earnings growth is accelerating," said Vicky Redwood, economist at Capital Economics.
"However, rising unemployment will be a key factor ensuring that any money freed up by falling inflation is saved, rather than spent."
Reuters