Business

British unemployment hits new six-year low

LONDON: Britain’s unemployment has hit another six-year low and wages are climbing in real terms, official data showed Wednesday in a pre-election boost for the government.

The resurgent economy also faces the prospect of record-low borrowing costs this year, economists said, after the Bank of England revealed that policymakers voted unanimously this month for the first time since July to hold interest rates at 0.50 percent.

Economists said the news will lift British Prime Minister David Cameron’s Conservative-Liberal Democrat coalition government, which faces a general election in May.

Cameron’s Conservatives have placed the performance of the economy at the heart of their election campaign.

The jobless rate for the September-November period slid to 5.8 percent, which was a level last seen in 2008, the Office for National Statistics (ONS) announced in a statement.

That compared with 6.0 percent for the three months to the end of October and beat market expectations for a drop to 5.9 percent.

The number of unemployed slid 58,000 to 1.91 million people during the period, compared with the three months to August.

That was also a six-year low last seen in late 2008, while a record 30 million people were in employment.

– Wage growth outpaces inflation –

In more positive news, wages excluding bonuses advanced 1.8 percent in the three months to November from a year earlier, the ONS said.

But recent data showed that British inflation had dived in December to a record low of 0.50 percent on the back of tumbling oil prices, sparking worries over the potential threat from deflation.

And ahead of Britain’s general election, the country’s economic growth is showing signs of cooling.

The International Monetary Fund on Tuesday held its 2015 expansion forecast for Britain at 2.7 percent and trimmed its 2016 growth prediction to 2.4 percent, warning that the weak eurozone could act as a “brake” on the British economy.

“Earnings growth is now developing an appreciable positive gap over inflation, which is very good news for workers and for consumer spending prospects in 2015,” said economist Howard Archer at consultancy IHS Global Insight.

“It is also potentially good news for the government as the Conservatives and Liberal Democrats will both be hoping that rising real earnings growth will make people feel happier about life and more inclined to vote for them in May’s general election.”

Separately, the Bank of England announced that its nine-member Monetary Policy Committee voted unanimously in January to maintain its key rate at 0.50 percent.

Minutes from the MPC’s last meeting showed that the no-change decision was this time backed by Ian McCafferty and Martin Weale, the two policymakers who had previously voted for a hike.

“Today’s combination of slower wage growth, a fall in the unemployment rate and the two hawks on the MPC switching their vote back to unchanged rates provide us with much information to digest,” noted Deutsche Bank economist George Buckley.

“The upshot is that we have opted to push out our view of the first rate hike well beyond our previous August 2015 call.

“With the bank not willing to look through the weakening in headline inflation and with further falls likely thanks to lower oil prices and utility bills, we have moved our view out for the first hike in interest rates substantially to May next year.” -AFP

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