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“Staggeringly Strong” figures show UK Unemployment fall


The latest figures from the Office for National Statistics show unemployment drop to 7.1%, in what BNP Paribas, Chief UK economist David Tinsley has described as “staggeringly strong.”

The figures come within touching distance of the 7% benchmark set by the Bank of England as the point they will consider increasing interest rates, despite the Bank previously claiming that the level wouldn't be reached until at least 2016.

Analysts have been surprised by the speed in which the UK economy has been creating jobs recently, as the latest fall in unemployment levels of 167,000 in three months is the largest drop exhibited in 17 years.

These larger than expected drops in unemployment has raised speculation amongst some analysts that the Bank of England will soon look to increase interest rates as levels near the 7% benchmark earlier set. However, the Bank of England’s Monetary Policy Committee (MPC) echoed recent comments that the 7% mark is not an automatic benchmark that will see interest levels increased, and that they will most likely wait for unemployment to drop even further before they consider a change to interest levels.

The latest minutes from the MPC’s monthly meeting read that due to inflation returning to the 2% target rate, there was “no immediate need to raise the Bank rate even if the 7% unemployment threshold were to be reached in the near future."

The minutes also said "it was likely that the headwinds to growth associated with the aftermath of the financial crisis would persist for some time yet", reinforcing the fact it is in no rush to raise rates.

Employment Minister Esther McVey was also encouraged by these latest figures, stating that "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.”

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