UK unemployment increases to 2.685m

UK unemployment rose by 118,000 in the three months to November to 2.685 million, official figures show.

The Office for National Statistics (ONS) said the unemployment rate also rose to 8.4% from 8.3%, the highest since January 1996.

The number of people claiming Jobseeker's Allowance in December rose by 1,200 to 1.6 million.

The number of young people looking for work hit a new record of 1.043m, taking the rate for 16-24 year-olds to 22.3%.

The number of people in employment rose slightly in the three months to November by 18,000 to 29.119 million.

The figures support the picture of a flat UK economy, with other data released on Wednesday showing average weekly earnings, including bonuses, grew at just 1.9%.

The Prime Minister, David Cameron, said the figures were not good news: "Any increase in unemployment is disappointing and obviously a tragedy for the person who becomes unemployed - that is why we are taking action to get people back to work".

He pointed to an increase in the number of people in work, to new private sector jobs and a small fall in the long-term unemployed.

But the figures showed the private sector was not compensating for job losses in the public sector, with the private sector creating 5,000 in the period, while 67,000 public sector jobs were lost.

The leader of the Labour Party, Ed Miliband, said the government "was cutting too far and too fast" and accused the prime minister of being "out of touch", boasting about rising employment.

"Isn't the truth, the defining characteristic of this government, that it stands aside and does nothing as thousands of people find themselves unemployed?" he told the House of Commons.

In Scotland, the number of people out of work rose by 19,000 to 231,000 over the three months to November, giving a jobless rate of 8.6%.

In Wales, unemployment fell by 1,000 in the quarter to 130,000, giving a rate of 8.9%, while in Northern Ireland it fell by 7,000 to 59,000, giving a jobless rate of 6.8%.

'Struggling Market'

Since the period covered by the latest ONS figures, there have been a number of job loss announcements from retailers and banks, and the government's public sector cuts programme is continuing.

Ross Walker, economist at RBS, said the numbers were unlikely to improve in the coming months: "Overall, there's a slightly softer feel to these figures. The labour market is struggling and forward-looking indicators such as vacancies and hiring intentions suggest it's going to be rocky in the first half of this year."

David Kern, the chief economist at the British Chambers of Commerce, called the situation "difficult" but said: "Certain aspects are actually more positive than expected. Employment has increased modestly despite the rise in unemployment. This shows the level of inactivity is falling as people return to the labour market and look for work."

The figures also showed a large rise in the number of self-employed people. A rise of 101,000 took the total to a new record of 4.2m.

It is an issue raised in a report by the Chartered Institute of Personnel and Development this week, claiming that this growth was keeping a lid on unemployment.

"While some of these newly self-employed may make a long-term commitment to being their own boss, or at least gain the necessary experience to do so, it's likely that most would take a job with an employer if only they could find one," said John Philpott, chief economic advisor to the CIPD.

The ONS said the number of employees and self-employed people working part-time because they could not find a full-time job had risen 44,000 to 1.31m, the highest figure since records began in 1992.

'Damaging effect'

Paul Kenny, the general secretary of the GMB union, blamed the government for the increase, saying: "This rise in unemployment was made in Downing Street. The truth is that jobs are haemorrhaging in the public and private sectors and no one in the government seems to know what to do to stop this."

And Martina Milburn, the chief executive of the youth charity The Prince's Trust, said the situation was grave for young people: "Unemployment can have a devastating effect, not just on future job and wage prospects, but also damaging well-being and mental health.

"Our research shows that unemployed young people are feeling less confident about the future than they did this time last year. The Government must work together with charities and employers on courses that are proven to help young people into jobs."

On Tuesday, figures showed that the rate of inflation fell from 4.8% to 4.2% in December, which was seen as increasing the chances of another cash injection from the Bank of England when its current quantitative easing programme ends.