U.K. unemployment hovered around the highest level in 17 years, supporting further expansion in the APF, especially after the drop in inflation from three-year high.

Jobless rate for the three months ended October lingered at 8.3%, in line with analysts' forecasts; the number of people without jobs surged by 128,000 to 2.64 million to the sharpest rise since 1994.

The number of youth (from 16 to 24 years old) increased by 54,000 to 1.03 million from August to October.

The British pound pared some of its advance against the dollar after the news to trade around 1.5500 compared with the day's starting level of 1.5478.

It seems that the sharp spending cuts by the government to rein in the huge budget deficit had led to cut in growth and rise in unemployment.

Moreover, the British economy expanded of 0.5% in the three months ended September, according to the GDP advanced reading, compared with the 0.1% expansion recorded in the second quarter.

However, Chancellor of the Exchequer in his autumn statement to commons lowered U.K. growth projections to 0.7% in 2012 from previous forecasts of 2.5% after recording a growth of 0.9% in the current year from March's estimates of 1.7%.

Unemployment, additionally, will rise to 8.7% in 2011 where he described youth joblessness as “unacceptably high,” according to Osborne forecasts.

In addition, jobless claims rose to 3.0 thousands in November to 1.6 million, above the revised 2.5 thousands recorded in October yet below projections of 13.7 thousands, whereas claimant count rate came in at 5.0%, lower than forecasts of 5.1%.

Now, there is more pressure on officials to boost the stimulus further after adding 75 billion pounds in October, especially as inflation rate slowed down to 4.8% in November.

The BoE's outlook refers to a sharp fall in the rate over 2012 as factors keeping inflation above the target which are the increase in the VAT from 17.5% to 20% at the beginning of the current year and the rise in import and energy prices will face downward pressure from the slack in labor market.

The outlook for both growth and inflation is likely to depend on the latest developments in the euro zone, according to the inflation report.

The BoE opted to leave interest rate unchanged at 0.50% and stimulus at 275 billion pounds in December, to assess the impact of the 75 billion pounds announced in October.