Unemployment drops by 40,000

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UNEMPLOYMENT fell by nearly 40,000 in February to its lowest level for 20 months, calming fears that the jobless total might be returning to a rising trend, according to official figures released yesterday, writes Robert Chote.

The Government argues that the unemployment falls over the past year stem, in large part, from its policies to promote the labour market flexibility which it advocated at this week's Detroit 'jobs summit'. However, economists warned that recent falls in the total overstated the number of jobs created.

Separate figures showing a fall of 0.5 per cent in high street spending volume last month fuelled fears that the economy is slowing ahead of next month's tax increases.

But the Chancellor's scope to combat that with an interest rate cut was constrained by a rise in earnings growth.

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