UK begins its recovery as number of jobless falls to 1.6m
Published 21/01/2010 | 05:00
BRITAIN'S unemployment fell much faster than expected, in another sign that the economy grew in the last three months of the year -- bringing an end to the worst recession on record.
The 15,200 drop to 1.61 million in the numbers claiming benefit was more than three times the consensus forecast, Britain's Office for National Statistics said in London yesterday.
The unemployment rate was unchanged at 7.8pc of the workforce, the statement said.
This compares with 10pc in the US and across the eurozone and 12.9pc in Ireland for the months of November, according to OECD statistics.
The UK figures were helped by a decline in the number of people actively seeking work. Actual employment fell by 14,000, after an increase of 53,000 in last month's quarterly figures.
"The recovery seems to be under way," George Buckley, chief UK economist at Deutsche Bank in London told Bloomberg.
"We haven't seen anything near the rise in unemployment we thought we were going to get. These are encouraging signs. The question is whether this can continue."
Bank of England (BoE) Governor Mervyn King said it was too soon to think of tightening policy and dismissed fears of inflation, given the weak state of the economy.
The bank's policy makers unanimously agreed yesterday to complete the rest of their £200bn (€230bn) bond-purchase to increase the amount of money in the banking system.
Former BoE policy maker David Blanchflower said the record 1pc jump in prices last month is "temporary" and deflation is the biggest threat to the British economy.
"We've seen this blip," he said in an interview with Bloomberg Television. "It's a temporary jump, but then it's going to fall fast. Down the road that (deflation) is what we have to worry about. The worry is then if you start to pull back the stimulus, there's the double dip," Mr Blanchflower said. "You've got to make sure that the recovery is strong before you pull back."