Bank of England governor Mark Carney has said in the banks latest report that the UK economic recovery has ‘taken hold’. We answer five questions on this latest news.
What has instigated this more positive economic outlook from Carney?
The report co-insides with positive unemployment figures that show employment is at its lowest in three years – Carney previously said he would not consider raising interest rates, currently at 0.5 per cent until the jobless rate falls to 7 per cent or below.
What’s the current jobless rate?
On Wednesday latest figures from the Office for National Statistics (ONS) it fell to 7.6 per cent, the lowest rate in more than three years.
The number of people claiming Jobseeker’s Allowance fell by 41,700 to 1.31 million in October.
There was also positive figures for youth unemployment with the number of jobless 16-to-24 year-olds falling by 9,000 to 965,000.
So, what is the Bank of England’s forecast for growth figures?
Growth for this year is forecast to be 1.6 per cent, up from 1.4 per cent previously. Next year annual growth is expected to be 2.8 per cent, rather than the 2.5 per cent it predicted in August.
What else did the bank’s report say?
The report said: “In the United Kingdom, recovery has finally taken hold. The economy is growing robustly as lifting uncertainty and thawing credit conditions start to unlock pent-up demand.”
When does the bank think unemployment will reach the magical 7 per cent figure?
The Bank said: “The MPC [Monetary Policy Committee] attaches only a two-in-five chance to the… unemployment rate having reached the 7 per cent threshold by the end of 2014.
“The corresponding figures for the end of 2015 and 2016 are around three in five and two in three respectively.”
So, being optimistic unemployment could reach 7 per cent next year, two years ahead of the time frame given in August.