The number of Britons claiming jobless benefit rose by the biggest amount on record last month, official data showed today, and the wider measure of unemployment rose above 2 million for the first time since 1997.
The Office for National Statistics figures showed the claimant count rose by 138,400 in February, after an upwardly revised increase of 93,500 in January.
That was well above analysts' forecasts for a rise of 85,000 and the biggest increase since comparable records began in 1971. The claimant count rate hit 4.3 per cent, the highest since 1999.
“It's clear that the data is absolutely dreadful,” said Amit Kara, UK economist at UBS. “Going forward we expect unemployment to rise well in excess of three million through next year.”
The internationally comparable ILO measure of unemployment rose by 165,000 in the three months to January to 2.029 million - the highest level since 1997, when the ruling Labour party, which faces an election by mid-2010, took power. That took the jobless rate up to 6.5 per cent.
The FTSE 100 index of leading shares and the pound fell after the data, which were much weaker than markets expected.
Britain's economy entered recession at the end of the last year for the first time since the early 1990s. It contracted at its fastest pace since 1980 in the three months to December and is expected to keep shrinking for much of this year.
New forecasts from the International Monetary Fund, flagged up by an official yesterday, suggest it will fare worse than most its major competitors.
The IMF expects the British economy to contract by a brutal 3.8 per cent this year and shrink a further 0.2 per cent in 2010, at a time when most of its partners are seen recovering.
Unemployment is likely to rise even further this year because the figures tend to lag developments in the economy.
Bank of England policymaker David Blanchflower thinks there could be one in 10 people out of work by the end of this year.
“Horrendous,” said George Buckley, chief UK economist at Deutsche Bank. “It does take about six months before changes in GDP have their maximum effect in the jobs market.”
Reuters