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Unemployment plummets to 7.1% as Bank cools rate rise talks

Unemployment fell by a massive 0.5 per cent from September to November last year to hit 7.1 per cent and move within touching distance of the Bank of England’s 7 per cent threshold for raising interest rates.

The Office for National Statistics reports a huge 0.5 per cent drop compared to June to August as the UK economy picks up steam.

The rate has fallen 0.6 per cent compared to the same period in 2012.

There were 2.32 million unemployed people aged 16 and over, down 167,000 from June to August and down 172,000 from a year earlier.

Last August Bank of England governor Mark Carney unveiled his forward guidance plans by vowing to keep interest rates at 0.5 per cent until unemployment falls below 7 per cent.

The rapid falls in unemployment since his announcement has seen him try to cool expectations by insisting the 7 per cent level is a “threshold, not a trigger” for rate rises.

Minutes from the Bank of England’s monetary policy committee, published today, went further, saying there is “no immediate need” to raise rates even if the threshold is met.

The minutes state: “It is likely that the headwinds to growth associated with the aftermath of the financial crisis would persist for some time yet and that inflationary pressures would remain contained. Consequently when the time did come to raise Bank Rate, it would be appropriate to do so only gradually.”

The ONS reports the percentage of people aged from 16 to 64 who were in work was 72.1 per cent.

Total pay and regular pay both rose by 0.9 per cent compared with September to November 2012, well below the annual rate of inflation which hit 2 per cent in December. 

In November 2013 employees earned, on average, £475 a week including bonuses and £447 a week excluding bonuses before tax and other deductions from pay.

Writing on Twitter Prime Minister David Cameron said: “The biggest quarterly increase in employment on record. More jobs means more security, peace of mind and opportunity for the British people.”

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