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Unemployment rate drops to 7.1% as record-high numbers enter into work Fall in jobless total is second biggest on record, renewing speculation about rise in interest rates
(about 2 hours later)
The UK unemployment rate has seen one of the biggest drops ever recorded, falling to 7.1 per cent and bringing it within touching distance of the Bank of England’s interest rate landmark. Unemployment fell to its lowest figure for almost five years today, prompting renewed speculation about a rise in interest rates.
Official statistics showed that the number of people not in work fell by 167,000 in the three months up to November, taking the total to 2.32 million – the lowest for almost five years. The number of jobless dropped by 167,000 in the three months to November to 2.32m, the second biggest fall on record.  The unemployment rate fell to 7.1 per cent, close to the 7 per cent at which the Bank of England will consider an increase in interest rates.
More than 280,000 people entered employment in the period, which David Cameron hailed as the “biggest quarterly increase in employment” ever recorded. However, the Bank is expected to "move the goalposts" next month by changing its strategy so that it takes account of other factors.
The Prime Minister tweeted: “More jobs means more security, peace of mind and opportunity for the British people.” Today's figures showed that average wage growth has remained at 0.9 per cent - well below the 2 per cent level of inflation - and the Bank is under pressure to consider using pay growth as an additional threshold for its interest rates policy.
But the good news could soon trigger a rise in interest rates, after the Bank of England said it would hold them at a record low level of 0.5 per cent until unemployment dropped to 7 per cent. Ministers welcomed the faster than expected fall in unemployment. The quarterly fall of 167,000 is the biggest since the autumn of 1997 and the second largest since records began in 1971. he number of people in work reached a record high of just over 30m, giving an employment rate of 72.1 per cent, an increase of 0.5 per cent over the three months to November. The number claiming Jobseeker's Allowance in December fell by 24,000 to 1.25m.
Analysts had not anticipated that threshold to be reached until later in the year – though the bank’s governor Mark Carney has previously stressed it was not an automatic process, and that he would have to approve an interest rate rise first. David Cameron and Ed Miliband clashed over the statistics in the Commons, after the Labour leader accused the Prime Minister of being "complacent" about wages figures which, he claimed, showed that  working people are more than £1,600 a year worse off on average under the Coalition. At Prime Minister's Questions, Mr Miliband said it was "scandalous" that a majority of 13m people living in poverty are in work rather than jobless.
The Bank of England says a figure of 7 per cent will not automatically trigger an interest rate riseThe Bank of England says a figure of 7 per cent will not automatically trigger an interest rate rise
The new unemployment rate of 7.1 per cent is down by 0.5 per cent compared to June-August, and by 0.6 per cent year on year. Mr Cameron blamed the slow growth in pay on "the mess" left behind by Labour which led to the biggest recession for 100 years. He accused Mr Miliband of being "like an arsonist" who seeks out fires he started and then complains the fire brigade are not acting fast enough.
The number of people claiming jobseeker's allowance in December fell by 24,000 to 1.25 million, the lowest figure for almost five years – and the so-called “claimant count” has now fallen for 14 months in a row. Mr Miliband replied that Mr Cameron "cannot be the solution to the cost of living crisis because he just does not understand the problem."
The record rise in the number of people in work has seen the total reach just over 30 million, its highest ever. There was also a fall in the number of people working part-time because they could not find full-time jobs - down by 12,000 to 1.4 million. Esther McVey, the Employment Minister, said: "With the highest quarterly fall in unemployment since 1997, it's clear that the Government's long-term economic plan to get people off benefits and into work so they can secure their future is proving successful."
Employment Minister Esther McVey said: “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 - the largest ever. Rachel Reeves, the shadow Work and Pensions Secretary, welcomed the drop but said: " The Government should use this opportunity to tackle the unacceptably high levels of long-term unemployment and youth unemployment. More than 900,000 young people are unemployed and over 250,000 young people are long-term unemployed."
Rachel Reeves, the shadow Work and Pensions Secretary, said the fall in unemployment was “welcome” but still doesn’t solve the country’s “cost-of-living crisis”. Dr John Philpott, director of The Jobs Economist, said: "It's now inevitable that unemployment will soon fall below the Bank of England's forward guidance rate of 7 per cent. However, the weakness of pay growth suggests there is still a considerable amount of slack in the labour market which for the time being remains an inflation free zone. Better news on jobs is no reason for an early rise in UK interest rates."
“These figures also show prices are still rising more than twice as fast as wages which means working people are over £1,600 a year worse off on average under this out-of-touch Government,” she said.