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UK jobless claims unexpectedly increased in August for the first time in seven months, a sign the economic recovery may be faltering just as the government starts the country's biggest austerity drive since World War II.

Claims for unemployment benefits rose by 2,300 to 1.47 million, the Office for National Statistics said today. Overall unemployment in the quarter through July fell by 8,000 to 2.47 million.

The job market is showing signs of weakening as the economy braces itself for budget cuts of as much as a quarter from Prime Minister David Cameron's government, to be outlined next month.

Bank of England policymaker Martin Weale said yesterday the public spending squeeze may weigh on the labour-market recovery and unions are pledging coordinated strike action.