Unemployment Falls to 7.4%

Unemployment has fallen to its lowest level since 2009. With 7.4% of the UK population is now out of work, bringing investors one step closer to an interest rate hike 

Emma Wall 18 December, 2013 | 2:48PM
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A surge in employment has brought the jobless level down to just 7.4% - meaning the UK is one step closer to an interest rate rise. This is the second consecutive decline in the unemployment rate and the lowest rate since April 2009. UK employment in the three months to October is up 250,000, compared to the previous three months, outpacing consensus expectations of 165,000.

Last month Bank of Enlgand governor Mark Carney explained that stronger than expected demand has helped the unemployment rate to fall faster than expected. The Bank forecast that unemployment rate to hit the Bank’s 7% threshold in the second half of 2015. Bank of England base rate has stubbornly remained at 0.5% for nearly five years, since March 2009. But once the unemployment threshold is met the Bank of England will negotiate an interest rate rise. 

“Latest data from the Office of National Statistics shows a huge surge in employment and sharp fall in the unemployment rate. This news comes as a shock as GDP output has continued to lag the recovery in the labour market," said Azad Zangana, European economist at Schroders. 

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Emma Wall  is former Senior International Editor for Morningstar