Weakest rise in 12 months UK unemployment claims

07-16-2009 12:22

In June unemployment claims in the UK showed the weakest increase in 12 months, proving that the recession is moderating. Jobless benefit claims reached the highest level in a year, rising 23.800 to 1.56 million, according to the National Statistics data. Unemployment in May rose by 281.000; the largest increase since record-keeping started in 1971.

Retail sales and housing market

Gordon Brown, Prime Minister of the United Kingdom and leader of the Labour Party, strives to release the UK from its most intensive economic crisis in 50 years, while the next election will take place in less than 12 months. Retail sales went up versus June 2008 and the housing market also progressed in June, as Charles Bean, Deputy Governor at the Bank of England, stated today that the economy is possibly operating very slowly.

Unemployment

Overall unemployment climbed to a record level of 2.38 million versus 1995, according to the International Labour Organization (ILO) standards. Mid-2010 unemployment could reach a level of 3.2 million, according to the forecasts by the British Chambers of Commerce (BCC). The BCC also reported that the unemployment rate on the ILO gauge reached 7.6%, in comparison with 5.2% in Japan and 9.5% in the Eurozone and in the US.

Extensive process

Charles Bean stated that the economic recovery could be an extensive process and that rising unemployment is indispensable, while he also believes that the slump has most likely bottomed. Bean said that Brown’s government would agree to exceed the upper limit of 150 billion Pound ($245 billion) for asset acquisition by a “rational sum” in case it is needed.

More job cuts

For the near future, companies continue their plans to lay off employers. British Airways Plc is obliged to reduce pay and job costs in order to manage the slump. Corus, the world's fifth largest steel producer, could cut 366 jobs at a plant in northeastern England.

Sustainable recovery

The labor market will sooner or later progress if a recovery is sustainable. The National Institute of Economic and Social Research (NIESR) data prove that in the second quarter the economy contracted at a slower rate to 0.4% versus 2.4% in the initial quarter of 2009.

Small rise salaries

In June the housing market progressed on the back of increasing numbers of London real-estate agents and inspectors noting that prices increased more than declined, according to the Royal Institution of Chartered Surveyors. The British Retail Consortium stated that same-store retail sales went up 1.4% in comparison with 2008. The outlook for more job cuts is keeping salaries down. Earnings, exclusive bonuses, showed the most modest raise of 2.6% since recordkeeping started in 2001. Hays Plc, a British company providing recruitment and human resources services, announced last week that it will freeze salaries for all employees, inclusive the management after the sum of fees it obtained decreased at a rising pace.