Britainís unemployment rate has fallen to 7.1%, as it edges closer and closer to the threshold that Bank of England governor Mark Carney said he would consider increasing interest rates.
Data from the Office for National Statistics indicated that the number of workers currently unemployed in the UK fell to 2.32 million in the last quarter of 2013, down by 167,000 from the three months before.
The ONS also revealed that the number of individuals claiming the Jobseekerís Allowance dropped to 1.25 million in the last month of 2013, down by almost 25,000 from in August.
The recent upturn in the UKís economy combined with the rapidly falling unemployment rate in the country has led to many leading economists predicting that interest rates will rise earlier than the initial 2016 forecast that was given by the Bank of England.
Bank governor Mark Carney previously identified that he would not contemplate any rise in interest rates from their historic low of 0.5% until that time that unemployment fell below 7%.
It was thought initially that this would not happen until late 2016, though recent forecasts have estimated that it may happen at some point this year now.
And the ONSís latest unemployment latest unemployment report will likely reinforce the idea that interest rates will rise sooner rather than later in the UK.
The rate at which unemployment has fallen in the UK in the last year has been nothing short of incredible, with the 167,000 drop in the final quarter of 2013 the largest drop since back in 1997.
“Creating jobs and getting people into employment are central to our economic plan to build a stronger, more competitive economy, so it is very encouraging news that we’ve seen a record-breaking rise in employment over the last three months,” said Employment Minister Esther McVey.
“The rate of unemployment in the UK continues to collapse,” said Chris Williamson, chief economist at Markit.
“All eyes turn to the Bank of England to see how forward guidance will be modified to account for the far-faster than anticipated improvement in the labour market.”
Despite a multitude of economists predicting that interest rates will rise this year, the Bank of England has remained hinged on their stance and have given no indication that they are considering a rise anytime in the near future.
A recent release of the minutes of the Bank of Englandís Monetary Policy Committee meeting suggests that they will wait until the growth in individuals wages catches up with inflation before they raise interest rates.
Previously, the bank had said that the reason that the country was suffering from a decline in living standards was due to the inflation rate being consistently higher than the growth in wages for workers, which has made the actual value of them decrease and lessened individuals spending power.
A report from the Bank said that: “cost pressures were subdued… members therefore saw no immediate need to raise the Bank rate even if the 7% unemployment threshold were to be reached in the near future”, the notes said.
The MPC report added that “it was likely that the headwinds to growth associated with the aftermath of the financial crisis would persist for some time yet”,