The latest data on unemployment in Britain is worrying for Britain as the jobless rate measured by the International Labor Organization methods rose to 7.2 percent. This according to several observers is going to give a tough challenge to the argument that the UK government has been keeping the country on the growth path.
The unemployment rate increase is the first increase since February last year wherein it stood at 7.1 percent in the three months through November. Nonetheless, Britain’s unemployment rate unexpectedly went up and this according to experts is suggesting the recent improvement in the labor market has lost some momentum and the UK government needs to rethink.
A lot of things would be determined or decided on the basis of the latest unemployment increase and one of them is that earlier the Bank of England last week had abandoned its commitment not to consider raising interest rates as long as unemployment remained above 7 percent. Now that it is clear that it has indeed crossed the limit, it won’t be able to argue.
The Bank of England Will Consider Employment Data While Issuing Guidelines
Though the Bank of England was riding on the fact that the economy grew faster than officials predicted when forward guidance was introduced in August, unemployment has crossed the expectations. Now, the central bank will have to reassess the situation to chalk out any further decision on the raising of interest rates.
Earlier in the first week of this month, Bank of England policy makers agreed to keep the current policy stance as the bank believes that with unemployment remaining above the 7 percent threshold, the committee’s policy guidance therefore remained in place and no member thought it appropriate to tighten, or to loose, the stance of monetary policy.
Nonetheless, earlier on Feb. 12, Carney of BOE announced that policy makers are shifting their focus to more than a dozen indicators of slack in the economy. Then he had said that the indicators such as the demand for more working hours would be included in it as in the fourth quarter, the number of part-time workers who want full-time work fell 29,000 to 1.43 million.
Currently, the BOE is focusing on eliminating spare capacity in the economy within the next three years; however, it wants at the same time to tame inflation which according to it fell below 2 percent target in November for the first time since 2009.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org