Unemployment figure plummets to 7.1% as British economy powers out of austerity era

Bank of England tries to calm fears of rise in mortgage rates
Interest rates: The Bank of England may raise rates in 2015, experts have predicted
23 January 2014
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The number of people out of work is plummeting faster than at any time since 1997, as the fast-recovering British economy powers out of the austerity era.

The jobless total dropped by a remarkable 167,000 in the three months to November to 2.32 million — 7.1 per cent of the working population and the lowest figure since spring 2009, official figures revealed today.

The fall, the biggest since the Nineties boom, means the unemployment rate is on the brink of hitting the seven per cent threshold at which Bank of England Governor Mark Carney said he will start to consider raising interest rates.

However, the Bank today sought to ease any fears that mortgage rates will soon start to go up just as the economy is returning to full health.

The minutes of its key rate-setting committee’s most recent meeting revealed that it “saw no immediate need to raise Bank Rate even if the seven per cent unemployment threshold were to be reached in the near future”.

Howard Archer, chief UK economist at City forecasters IHS Global Insight, said: “We believe the odds remain strongly in favour of interest rates staying at 0.50 per cent all through 2014. While rates will probably start rising in 2015, this may still not happen until around the middle of the year.”

Today’s unexpectedly impressive jobless figures also revealed that the number of people in work rose 280,000 to a record 30.15 million — the biggest quarterly increase in employment on record. They were hailed by the Coalition as the latest compelling evidence of the recovery’s strength and a major boost to the credibility of George Osborne’s stewardship of the economy.

In a message on Twitter, David Cameron said: “More jobs means more security, peace of mind and opportunity for the British people.”

Of the 280,000 new jobs created from September to November, 220,000 were full-time — a sign that increasingly confident employers are more willing to take workers on. The number of people working part-time because they could not find full-time jobs was down by 12,000 to 1.4 million.

David Morel, managing director of London-based Tiger Recruitment, said: “Both permanent and temporary markets are very busy, with employers across all sectors hiring at all levels.

“A rise in the number of active employers has been matched by a significant increase in applicants looking for new jobs.

“People sense that there are more opportunities out there and they are making more of an effort as a result.”

Today’s figures showed that earnings have not yet started to accelerate, despite the hiring boom. Pay rose just 0.9 per cent on average, compared with a year previously — well below the two per cent inflation rate.

Labour’s shadow work and pensions secretary Rachel Reeves said: “Today’s fall in overall unemployment is welcome. The Government should use this opportunity to tackle the unacceptably high levels of long-term unemployment and youth unemployment. More than 900,000 young people are un- employed and over 250,000 young people are long-term unemployed.”

In London unemployment fell by 18,000 to 354,000, or 8.1 per cent. The number of people in work in the capital rose by 54,000 to 4.009 million — the first time on record the figure has been above the 4 million mark.

Today’s figures come ahead of next week’s announcement about how fast the economy grew in the last three months of 2013 — with some forecasts pointing to growth of us much as 0.9 per cent.

The development will complete a remarkable turnaround for an economy that just a year ago appeared on course for a historic triple-dip recession.

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