The FINANCIAL -- U.K. unemployment jumped to the highest level since 1995 as the recession destroyed work in industries from banking to construction. Britain's unemployment rate meanwhile jumped to 7.9 percent in the three months to July, the Office for National Statistics (ONS) revealed in a statement.

The number of people seeking jobs in the three months through July rose by 210,000 to 2.47 million, ONS said in London on September 16. A separate measure showing claims for unemployment benefit climbed by 24,400 in August to 1.61 million, Bloomberg reported. The median forecast of 28 economists in a Bloomberg News survey was for an increase of 25,000.

Bank of England Governor Mervyn King said yesterday that households will feel pain from the recession even after the economy has stopped shrinking “because unemployment is either going to keep rising or remain high,” the same source gives information. Policy makers are printing as much as 175 billion pounds ($288 billion) in money to aid economic growth and avoid the threat of deflation.

There have been signs the UK economy is beginning to pick up, but jobless data tends to lag behind other measures, according to BBC. The number of 16 to 24-year-olds out of work rose from 928,000 to 947,000 - edging closer to the landmark of one million and adding to fears of a new "lost generation" of young people.

The jobless rate among this age group is at 19.7% - the highest since records began - meaning one in five is looking for work, the same source reported. Average earnings, including bonuses, increased by 1.7% in the three months to July, down from the previous month.

Trades Union Congress (TUC) General Secretary Brendan Barber said: "There are now over a million people out of work for more than six months, one in three of them under 25. There are no signs of recovery here, according to Guardian. "This is not the time to take risks with policies that could make unemployment worse. It might look rosier in city dealing rooms but out in the real world unemployment is the number one issue."

Catherine Matthews, a partner at licensed insolvency practitioners, Tomlinsons, added: "With so many firms folding, the prospects of re-employment are proving increasingly slim for those that have been unfortunate enough to lose their jobs, the same source report said. "The big problem for Britain's businesses, the reason why so many of them are going bust and laying off staff, is the banks aren't lending. The funding and financial support needed to survive just isn't there. It's what small and medium-sized business owners, and the accountants we work closely with, are saying to us day in, day out."

Earnings growth excluding bonuses fell to 2.2 percent in the three-month period, the lowest since records began in 2001,The New York Times informed. On Tuesday, Prime Minister Gordon told a Trades Union Congress conference that public spending will need to be cut to tackle Britain's soaring debt. Unions claimed cuts will prolong the recession and increase unemployment.

According to the same source, Mervyn King sounded a cautious note about the strength of any recovery in Britain, indicating that monetary policy would remain loose for some time to come.

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