UK Jobless Rate Hits 12-Year High

Unemployment in Britain rose to 6.5 percent in the three months ending in January, reaching its highest in 12 years and hitting the manufacturing sector hard.

LONDON (AP) -- Unemployment in Britain rose to 6.5 percent in the three months ending in January, with the number of people out of work reaching its highest in 12 years and the manufacturing sector particularly hard hit, the government said Wednesday.

The unemployment rate rose from 6.3 percent for the three months ending in December, leaving 2.03 million people jobless across the country, the Office for National Statistics said.

Employment in manufacturing fell by 120,000 since last year to 2.78 million, while the number working in mining, energy and water supply rose by 1,000 to 179,000. The global financial crisis has especially hurt manufacturers such as auto makers, with tight credit and low demand hindering sales.

"Not only is unemployment back to where it was in 1997, but it now looks as though we are heading towards the worst outlook for jobs in the U.K.'s postwar history," said John Philpott, chief economist at the Chartered Institute of Personnel and Development.

"Full employment is not just slipping away, it is sinking without trace," he added.

Philpott said the rise in the number of people claiming unemployment allowances was more alarming than the 2 million unemployed. "The monthly increase of 138,000 in the number of people claiming jobseeker's allowance surpasses even the darkest days of rising unemployment in previous recessions," he said.

The government report said 1.39 million people were claiming benefits in January.

"At this rate, unemployment looks set to reach 3.2 million in 2010," said David Kern, chief economist at the British Chambers of Commerce, who called for urgent action.

"There is a vital need for steps specifically aimed at preventing a damaging loss in our industrial skills base. Temporary measures such as wage subsidies need to be seriously considered," Kern said.

"Companies of all sizes, and in all sectors, are folding by the day, putting more and more people out of a job," said Alan Tomlinson, partner at insolvency specialist Tomlinsons.

He added that the prediction last month by the Confederation of British Industry "that unemployment will peak at just over 3 million in the second quarter of 2010 could prove to be wildly optimistic."

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