Surging inflation? Check. Negative GDP growth? Check. Increasing unemployment? Check. Dropping wages? Check. Looks like we have a stagflation bingo. Per Bloomberg: "U.K. unemployment claims unexpectedly rose in January, underlining the fragility of the labor market a year after the economy emerged from recession and as public spending cuts start in earnest. The number of people receiving unemployment benefits rose 2,400 to 1.46 million, the Office for National Statistics in London said today. The median of 25 forecasts in a Bloomberg News survey was for a 3,000 drop. Unemployment based on International Labour Organization methods rose by 44,000 in the fourth quarter to 2.49 million." And this is just the start of what real austerity means: "Prime Minister David Cameron is counting on hiring at private companies as his government embarks on budget cuts that will cost 330,000 public-sector jobs over the next four years." And more economic humor: "There is a risk unemployment could rise” this year, Philip Shaw, an economist at Investec Securities in London, said before today’s report. “It’s possible that the public-sector job cuts happen straight away and you don’t see a pickup in private-sector job creation.”" Coming soon to every centrally planned regime near you.
Employment fell by 68,000 to 29.1 million in the fourth quarter from the third, the statistics office said. Part-time work accounted for all of the increase in employment over the past year.
The ILO unemployment rate rose to 7.9 percent in the fourth quarter from 7.7 percent in the previous three months, the statistics office said. That compares with 10 percent in the euro region, 9 percent in the U.S. and 4.9 percent in Japan. The level of unemployment was 6,000 lower than in the September- November period.
Today’s figures showed wage settlements remain subdued, supporting the Bank of England’s argument that above-target inflation isn’t fueling demands for higher pay.
Average weekly earnings growth including bonuses slowed to 1.8 percent in the fourth quarter from 2.1 percent in September through November. Basic pay growth was unchanged at 2.3 percent.
Consumer-price inflation quickened to a 26-month high of 4 percent in January, twice the central bank’s 2 percent target, the statistics office said yesterday. Retail-price inflation, the benchmark for most U.K. deals, accelerated to 5.1 percent.
A third of the total unemployed had been out of work for more than 12 months, the figures showed. Joblessness among 16- 24-year-olds reached 965,000 in the fourth quarter, or 20.5 percent. Both measures were the highest since comparable records began in 1992.
And here's how their central bankers justify stagflation:
King, presenting the central bank’s quarterly forecasts today, said he saw no evidence of a pickup in wage growth as he defended his view that the surge in inflation will prove temporary.
Memorize this line: it will be used by the Generalissimo in a Congressional hearing within 3-6 months.