*UK jobless rate takes biggest jump in 15 years
*Belt-tightening in Europe doesn't extend to vacations

Bank of England governor Mervyn King has officially joined others warning
Britain will move into recession in the coming months. 

Unveiling the central bank's quarterly inflation forecast, he signalled
tough times ahead but did try to cast them  in a somewhat positive light. 

MERVYN KING, BANK OF ENGLAND GOVERNOR, SAYING:    
"The next year will be a difficult one, with inflation high and output
broadly flat...
...not so bad."

The target is two per cent but UK inflation is now 4.4 per cent - a 10-year
high - thanks to soearing food and energy prices. 

The bank's inflation forecast is five per cent. 

The gloomy scenario from the bank governor came as new unemployment figures
showd their biggest monthly rise in 15 years.
 
60,000 more people lost their jobs in the three months up to June for an
overall total of 1.67 million. 

That UK jobless rate is now 5.4 per cent. 

With growth near zero, an interest rate cut is very unlikely. 

Any return to King's "not so bad" scenario will very much depend
on oil, gas, electricity and wage demands staying down. 

But Brits are shaking off the gloom in summer sun spots. 

Thomas Cook, Europe's No.2 travel company, says budgets may be stretched
but vacations are still being taken - holiday bookings well up on last year.


The company says holidays are in the "must have" category -
especially when this UK summer has been dismal at best, more rain than sun.


The slowing economy hit European share prices, the prospect of more banks
reporting more losses leading stocks lower.  

The gloom also took a bite out of the UK currency. 

Susan Flory, Reuters