UK job market recovery adds pressure on Bank of England to hike rates

New evidence of the UK’s job market recovery is increasing the pressure on the Bank of England to hike interest rates from a record low of 0.5 per cent for the first time since 2009.

Lloyds Bank’s monthly snapshot of consumer confidence revealed that employment prospects are now in their best state for a decade, indicating that recovery is gathering momentum.

The survey of 2000 people also found improving job security.

The findings come ahead of the Bank’s latest inflation report on Wednesday. Governor Mark Carney is expected to acknowledge market expectations that borrowing costs are likely to rise before the second quarter of 2015.

Unemployment is predicted to have fallen to 6.8 per cent in the three months to March, below the Bank’s estimate which could trigger it to lower its estimate of slack in the jobs market, hinting at the need for earlier rate rises.

Société Générale economist Brian Hilliard said: “If the estimate is lowered by any significant amount then the markets will interpret that as a signal of imminent rate action.”

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