Bank of England urged to resolve jobs ‘crisis’ before raising rates by TUC

Half a million fewer people were unemployed in the first three months of 2008 than in January-March 2014

Associate business editor

The TUC will today seek to send a shot across the bows of hawks on the Bank of England’s Monetary Policy Committee by warning that unemployment is still too high to contemplate a rise in interest rates.

With the latest set of jobs data this week expected to show another fall in unemployment to 6.5 per cent from 6.6 per cent, the TUC will argue that it is still far higher today than before the recession, in every region of the UK.

The jobless rate stood at 5.2 per cent in the first three months of 2008 and the TUC will point to an analysis it has conducted of official figures showing that half a million fewer people were unemployed then than in January-March 2014.

It will also say that the biggest unemployment gap by age group is among young people, a group that has disproportionately suffered as a result of the recession and the Government’s austerity policy that has been designed to bring the country’s budget deficit under control. The number of unemployed 16-24 year olds is 167,000 higher than it was six years ago.

The Bank of England’s Monetary Policy Committee’s hardening stance towards rates has been the subject of fierce debate in recent months. Many economists now predict that interest rates will have to rise from their historic low of 0.5 per cent soon as the economy continues to recover.

However, inflation, and particularly wage inflation, remain low affording the Bank of England more flexibility than it might otherwise have.

TUC General Secretary Frances O’Grady said: “These figures should serve as a reality check for those who think the jobs crisis is over and that it’s time to start raising interest rates.

“City bigwigs may obsess about higher interest rates but the most pressing issue for millions of people is still how to find work. Ministers must remain focused on tackling the jobs crisis that still affects huge swathes of the country.”

But Investec economist Philip Shaw said the debate over interest rates could not simply stand or fall on unemployment. “Joblessness is declining quickly and many on the MPC might argue that if rates stay too low for too long labour shortages will appear and threaten higher inflation. Moreover by making an early move the committee would be better able to sit back every so often to make sure that it wasn’t raising rates too quickly.”

Fear factor: firms expect 2014 rates rise

Business confidence has been hit around the world by fears that some central banks are preparing to put up interest rates, according to a new survey. Markit’s Global Business Outlook Survey in June pointed to a net balance of companies expecting a rise in business activity levels over the coming year of +39, down from the +40 reading from the last survey in February. Chris Williamson of Markit said the prospect of tighter monetary policy in the US and Britain was seen as a threat by firms surveyed.   

Ben Chu

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border