Forex News – UK unemployment rises to highest since 1994

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Sterling was little changed against the dollar after the release of UK unemployment data which weren’t that uplifting. Based on the ILO measure of unemployment, the number of unemployed Britons rose by 128,000 to 2.64 million, which is the highest since 1994. The data is based on the number of people looking for work in the three months through to October.

The UK is clearly feeling the effects of the euro zone debt crisis and is threatening to push the country into a recession. Jobless-benefit claims rose 3,000 to 1.6 million in November. Economists had forecast an increase of 13,700. The Office of National Statistics reported that the unemployment rate rose to 8.3 percent from 7.9 percent between May and July.

Many employers are cutting back from hiring in response to a deteriorating outlook of the British economy at a time when the government is shedding hundreds of thousands of jobs to lower the budget deficit.

The future looks grim as unemployment is expected to rise further as the country enters a mild recession and some forecast unemployment will peak at 8.7 percent at the end of 2012.

Meanwhile, the data comes as Thomas Cook PLC announced its decision today to cut as many as 600 jobs and close 200 of its 1,300 high-street stores,  more than the 24 it had originally planned to close. The British tour operator reported huge losses in the year ending  September 30.