The number of people claiming unemployment benefit rose by 15,500 in June, the fastest rise in over 15 years.

The rise in the number of people claiming the jobseekers’ allowance in June, above analysts’ expectations of a 11,000 gain, is the largest increase since December 1992 when it rose by 71,400.

The fifth consecutive monthly rise takes the total number of people claiming jobseekers allowance to 840,100, according to the Office for National Statistics (ONS).

It also emerged today that the ONS has revised May’s figures. Last month, it said an extra 9,000 people were claiming benefit but today said this figure had been revised up to 14,300.

In the three months to May, 118,000 people were made redundant, 10,000 more than in the previous quarter,

The total number of unemployed people rose 12,000 in the three months to May, taking the total to 1.62 million, although the unemployment rate was unchanged at 5.2 per cent.

Total employment levels reached a record 29.59 million during the quarter - the highest since 1971, but the number of job vacancies fell by 32,200 in the three months to June as the economic slowdown took its toll.

There is rising concern that the pace of unemployment could accelerate in the coming months as companies grapple with the challenging economic climate.

In recent weeks, property and construction businesses have cut around 10,000 jobs as the tightening mortgage markets is making it increasingly difficult for people to buy homes.

Howard Archer, chief UK and European economist at Global Insight, said: "Unemployment is a lagging indicator and it seems inevitable that extended very weak economic activity and deteriorating business confidence will exact an increasing toll on the labour market over the coming months."

Rising unemployment is likely to take a toll on the already beleagured housing market as homeowners run into difficulties in keeping up with their mortgage payments, and will cause an additional headache for the Bank of England which is grappling with the twin threats of rising inflation and a slowing economy.

On the upside, wage inflation has been contained. Headline average earnings, which includes bonuses, rose by 3.8 per cent in the three months to May, down from 3.9 per cent in the three months to April.

Excluding bonuses, earnings growth also edged down to 3.8 per cent over the three months to May from 3.9 per cent in the previous period.

Earlier this month, the Bank of England's Monetary Policy Committee voted to keep the UK interest rate at 5 per cent despite rising inflation which is now at a 15-year high of 3.8 per cent.

Mr Archer said: "It is absolutely critical that earnings growth remains muted, if the eventual next move in interest rates is to be down.

"Any sign that higher inflation and elevated inflation expectations are feeding through to push up pay significantly would put major pressure on the Bank of England to lift interest rates - despite the deepening economic slowdown - to try to prevent a damaging wages-price spiral developing."

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