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Pressure on Interest Rates

Written By On 13/11/2013

Unemployment fell to 7.6 per cent in the last quarter edging closer to the 7 per cent benchmark the governor of the Bank of England set for a probable rise in interest rates.

Britain's unemployed figures fell by forty eight thousand in three months according to the Office for National Statistics. This now means that this is now the least amount of people across the UK that have been out of work for over three years.

However Jeremy Cook, at World First currency brokers is still not necessarily anticipating an interest rate hike earlier than 2015. He believes that that even though the 7 per cent barrier may be reached by the end of next year, the BOE will not choose to raise the rates immediately.

Their chief economist says

As it stands, the UK is the strongest economy in the G10 and it certainly has momentum. While the jobs market seems to be improving, we are still reticent to revise our thoughts on when the Bank of England will raise interest rates as part of its forward guidance plan.

Andrew Hunter from jobs website Adzuna advises caution on the figures announced. The co-founder says

The autumn months performed strongly, but the outlook for Christmas is beginning to darken. We are already seeing the volume of job vacancies easing off in November, ahead of what is typically a slower time in the jobs market.

The ONS also told us that the cost of living according to the CPI was up by 2.2 per cent in October which was half a per cent less than the previous month.

This means that even though inflation is down, prices are going up by approximately triple the rate of salaries because they have only had an average annual increase of 0.7 per cent.