UK unemployment rise adds to pressure on Osborne's austerity strategy

Unemployment jumped by 70,000 in the three months to the end of February and pay rises registered the lowest increase since 2001, adding to the mounting pressure on George Osborne to adopt a more aggressive growth strategy.

However, a steep fall in manufacturing and construction output this year has undermined hopes of a strong resurgence in growth. The low level of pay rises will be a particular worry to the chancellor after the rate fell to 1%, the lowest since records began in 2001 and well short of the 2.8% inflation rate.

"Overall, the data fuels concern that the labour market's recent strength is fraying as the economy continues to struggle for even modest sustained growth. Meanwhile, earnings growth remained very weak in February. While weak earnings growth is clearly helping to keep unemployment down, the flip-side of this is that it continues to limit consumers' purchasing power.