Bloomberg News

Britons’ Job Concerns Worsen as Economic Recovery Loses Strength

January 09, 2012

Jan. 9 (Bloomberg) -- Britons’ concern about losing their jobs soared last month as Europe’s debt crisis threatened to push the economy back into a recession, Lloyds Bank Corporate Markets said.

An index of job security fell to minus 33 from minus 21 in November, the unit of Lloyds Banking Group Plc said in an e- mailed report in London today. That’s the lowest since the index began in 2004. A measure of inflation expectations fell to the lowest in two years, reflecting the economic slowdown.

The Bank of England will maintain its bond-purchase target at 275 billion pounds ($423 billion) this week and its benchmark interest rate at a record low, surveys of economists show. While factory and services gauges improved in December, Europe’s turmoil is damping export demand, and unemployment is rising.

“The U.K. economy faces another difficult year,” Michael Saunders, chief European economist at Citigroup Inc. in London, said last week. “We do not expect that lower inflation will give much boost to consumers; with employment falling, real household disposable incomes will probably fall again in 2012.”

Saunders, who cut his forecasts for U.K. economic growth in 2012 and 2013, sees unemployment rising to about 3 million people by the end of this year. Data in December showed the jobless total was 2.64 million in the quarter through October.

Lloyds’ index of consumers’ inflation expectations dropped 5 points from November to 65, the lowest reading since December 2009. Still, the survey showed Britons think inflation, which was at 4.8 percent in November, will probably accelerate to 6.7 percent in the next 12 months. The survey of 2,052 consumers was carried out between Dec. 9 and Dec. 18.

All but one of 41 economists in a Bloomberg News survey said the Bank of England will leave its bond-purchase target unchanged this month. While some policy makers have said more stimulus may be needed, they have indicated they will wait until the current round of asset purchases ends in February.

In a separate report, Visa Europe said Britons cut spending on Visa payment cards by 1.1 percent in December from November, when it dropped 0.3 percent. Spending was down 0.8 percent from a year earlier.

--Editors: Fergal O’Brien, James Hertling

To contact the reporter on this story: Scott Hamilton in London at

To contact the editor responsible for this story: Craig Stirling at

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