UK jobless rates holds at 7.8 percent

[February 17, 2010]  LONDON (AP) -- The number of people claiming jobless benefits in the United Kingdom has hit a 12-year high at a moment when the Bank of England is uncertain whether to pump billions more into stimulating the economy, official reports showed Wednesday.

The nation's unemployment rate held steady at 7.8 percent in the three months ending in December, the Office for National Statistics said, but the number of people claiming unemployment benefits, the jobseeker's allowance, rose by 23,500 in January to 1.64 million, the highest figure since April 1997.

The Bank of England's rate-setting Monetary Policy Committee decided earlier this month not to expand its program of asset purchases which has pumped 200 billion pounds ($310 billion) into the economy. Minutes of the meeting on Feb. 3-4 disclosed some debate on expanding the program, known as quantitative easing, though eventually the panel decided unanimously to stand pat.

"For some members, the arguments were finely balanced," the minutes said.

"Given a quantitative easing increase was discussed ... those hoping for and/or thinking that there may be more quantitative easing at a later date have certainly not had their hopes dashed," said Marc Ostwald, strategist at Monument Securities.

But Vicky Redwood, analyst at Capital Economics, said she believe that "before long, the recovery will be looking weak enough to justify further action."

The minutes also disclosed concern that more stimulus might increase expectations of inflation.

"For some members, there also remained risks that adding to the size of the asset purchase program might increase the chance of unwarranted increases in asset prices, and that attempting to eliminate the degree of spare capacity too rapidly might eventually result in more inflationary pressure," the minutes said.

The committee appeared sanguine about unemployment, noting that the rate had stabilized although there had been an increase in part-time working and decrease in full-time unemployment.

"But the pace at which full-time employment was falling had been moderating since the summer of 2009. And the rate at which unemployed workers were finding employment had picked up. Overall, the employment data remained more resilient than might have been expected given the scale of the decline in recorded GDP," the minutes said.

In the latest jobless data, the Office for National Statistics said the number of full-time workers fell by 37,000 to 21.22 in the fourth quarter, the smallest quarterly drop since July 2008. The number of part-time workers rose by 25,000 to 7.67 million.

The number of people out of work for more than a year rose by 37,000 in the last quarter of 2009 to 663,000, also the highest since 1997.

The unemployment rate, which peaked at 7.9 percent during the current recent recession, was the same as the rate reported in January for the three months through November.

[Associated Press; By ROBERT BARR]

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