UK unemployment and interest rates rise … but is it all doom and gloom?
Recent research suggests the number of people out of work in Britain has risen at the fastest rate in almost five years. According to the Office for National Statistics, the number of unemployed people in the UK increased by 46,000 to 1.47 million in the three months to December 2017 when compared with July to September 2017.
It’s not all doom and gloom however, average earnings are up £11 a week from last year and is now reportedly £490 a week. Workers should be bargaining with employers to raise wages further as employers will pay higher wages if they’re intent on attracting good staff and retaining them. What is interesting is that there has been an increase in the number of full-time employees and a decrease in part-time and self-employed workers. It’s great to see these statistics. In a climate of continuing economic uncertainty, previously inactive people are seeking work in greater numbers and many workers are getting the job security they need and deserve.
Amid a tightening labour market, The Bank of England has announced an interest rise was only months away should unemployment levels remain as they are and the demand for workers continues to force up pay growth. Gertjan Vlieghe, a member of the monetary policy committee that sets the interest rates, explained recently that a pick-up in wages and an increase in household debt meant the economy was ‘ready for somewhat higher interest rates’. Having kept the Bank Rate at 0.5% in February, The Bank of England has hinted that the rates were likely to rise faster than previously expected. A rate rise is expected in autumn or winter of this year, but economists commented that a rise of 0.25 per cent could come as early as May, with another one by the end of the year if the economy performs well.
People often fear the worst when they hear news of rising rates and with good reason. Although good for savers, an increase in the rate will be bad for borrowers. Mortgage rates will rise meaning millions of homeowners on variable or tracker mortgages will see their monthly mortgage repayments increase somewhat. Not all analysts agree that a rate rise is the best decision for the country. It all depends on whether you favour economic growth or opt to keep inflation down. If you favour the latter, then the rate rise predicted to take place towards the end of the year makes sense.