UK jobless highest rise since 1992

LONDON - UK jobless claims rose more than expected in February as companies such as MFI Furniture Group and Cable & Wireless cut staff after the economy slowed in 2005.

The number of people out of work and claiming benefits swelled by 14,600 from January to 919,700, the biggest increase since December 1992, the Office for National Statistics said.

Employers are shedding workers after consumer spending, which accounts for two-thirds of the economy, grew at the slowest pace in 10 years in 2005 and oil prices rose 40 per cent. While the Bank of England forecasts a revival, economists and some policymakers say it won't be strong enough to promote hiring.

"Labour-market conditions have taken a further turn for the worse," Jonathan Loynes, an economist at Capital Economics in London, said. "Employment has posted a fall of this size on only one other occasion since the 1990s recession."

Record employment and 54 quarters of economic expansion in the UK helped Prime Minister Tony Blair win a third term in office in May. Yesterday's report comes a week before Chancellor of the Exchequer Gordon Brown presents his 10th annual Budget to Parliament.

Brown on December 5 halved his 2005 growth forecast to 1.75 per cent, the least since 1992 when the economy was emerging from its last recession.

The number of workers receded to 28.81 million in the three months through January, down by 7000 jobs from the previous three months.

The number of unemployed grew by 37,000 in the three months through January to 1.53 million, pushing the rate to 5 per cent.

The rate is higher than that of the US, at 4.7 per cent, while almost half the 8.3 per cent in the dozen nations that share the euro.

- BLOOMBERG