U.K. jobless claims rose 15,500 in June after a revised higher 14,300 the month prior. It marked the fifth month that claims rose and was the biggest increase since 1992, the last recession. The slowing global economy, rising inflation and the worst housing slump since the last recession have led to employers cutting jobs as the growth outlook dims. The BoE has paused their recent easing policy as they try and rein in inflation that has breached the central bank’s 3% threshold. Governor King expects prices to continue rising at a rate above 4% in the foreseeable future, making it prohibitive for the MPC to lower rates. Although consumer spending has remained resilient gaining 3.5% in May, shrinking home values, mounting job losses and eroding purchasing power should lead to consumption faltering, which will bring the economy to the door step of a recession. The BoE isn’t expected to change rate for the remainder of the year, however, if oil prices continue to ease and growth slows further, a rate reduction may be the next policy action fro the central bank. – John Rivera, Currency Analyst
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