UK unemployment rises 281,000 to 2.38M; Rate up 7.6%

Britain's unemployment rate rose to 7.6% as the country's steep recession raised the number of people out of work to 2.38M in the March-May quarter, official data showed. The unemployment rate was up from 7.2% in the 3 months to April, & the number of unemployed rose by a record 281,000, said the Office for National Statistics. 301,000 people lost jobs in the period, the 2nd highest figure on record & an increase of 31,000 over the previous quarter, it said. "On the basis of these numbers we reaffirm our forecast that unemployment will peak at around 3.2M next year," said David Kern, British Chambers of Commerce chief economist. Britain is suffering the effects of the world financial crisis & its own collapsed housing market bubble. Sagging growth has led the Bank of UK central bank to cut interest rates to a record low of 0.5% and take steps to expand the money supply, but it is expected that the jobs market will not recover soon. "We doubt that unemployment will start to fall until GDP growth has got back toward its trend rate of 2.5% or so. And this might not happen for another couple of years," said Vicky Redwood, Capital Economics UK economist. The ONS reported average earnings excluding bonuses fell by 0.1% compared to the previous 3 months, but earnings including bonuses rose by 1.4%. Unemployment was worst in the West Midlands, a base for the UK vehicle industry, at 10.3%. NE England had the 2nd-highest rate at 9.2%, while the SE including London had a 6.1% jobless rate. "Any optimism unemployment will peak below 3M next year before the jobs outlook starts to improve would seem to evaporate," said John Philpott, Chartered Institute of Personnel & Development chief economist . "Today's figures are truly horrendous," said Brendan Barber, Gen Sec of the Trades Union Congress. "It's particularly worrying that over half a million unemployed people were out of work for at least a year, including 133,000 young unemployed people," Barber added. David Breger, partner at H.W. Fisher chartered accountants in London, said unemployment figures highlighted the recession's impact on small- and medium-sized business --"businesses that have been left high & dry by the banks' reluctance to lend." "It must be particularly galling in the same week Goldman Sachs, bailed out by the U.S. gov't., is announcing better-than-expected profits," Breger said.