Strong growth ‘not yet secured’

Bank of England governor Mark Carney
Bank of England governor Mark Carney
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THE Governor of the Bank of England said there was still plenty of “slack” in the labour market as the Government trumpeted another fall in the number of people out of work today.

Mark Carney compared the performance of the economy to a team’s progress through football’s World Cup, suggesting the UK had so far only progressed through the qualifying rounds.

His view was more measured than that of Deputy Prime Minister Nick Clegg who said the latest job figures showed the economy is starting to “fire on all cylinders”.

In the three months to March, the number of people out of work in Yorkshire fell by 10,000 to 230,000.

But Yorkshire’s unemployment rate of 8.3 per cent remains higher than the national average of 6.3 per cent.

Mr Carney was delivering the Bank of England’s latest economic forecasts and moved to dampen speculation that an interest rate rise is on the horizon.

He said that the “significant slack” in the labour market was shown by the 1.4 million people working part-time because they cannot find full-time jobs.

Improved economic data and concerns over rising house prices has led to speculation that interest rates could rise sooner than expected.

Mr Carney said: “As time has moved on and the recovery has been sustained, the economy has edged closer to the point at which Bank rate will need gradually to rise.”

But the governor promised any rise would be gradual and limited and that the rate “may need to stay at low levels for some time”.

“Amidst the excitement that output is close to regaining its pre-crisis level we should not forget that the economy has only just begun to head back towards normal.

“Securing the recovery is like making it through the qualifying rounds of the World Cup. That is an achievement, but not the ultimate goal.

“The real tournament is just beginning and its prize is strong, sustained and balanced growth.”

Mr Carney added: “As we progress we will get to a welcome moment where the economy has headed far enough towards normal that there will be an adjustment in Bank rate.”

The improvement in the jobs figures was in part down to an increase in the number of people employing themselves which now stands at a record 4.5m.

The number of people claiming jobseeker’s allowance also fell by 25,100 in April to 1.12m.

Employment Minister Esther McVey said: “As the recovery takes hold, more people are able to get a job or set up their own business and become the employers of tomorrow.

“Each and every person who has made a new start or hired someone new is helping to make Britain a more prosperous and confident place to be.”

Average earnings increased by 1.7 per cent in the year to March, slightly ahead of the latest headline inflation rate of 1.6 per cent - the first time this has happened for four years.

But Shadow Work and Pensions Secretary Rachel Reeves insisted families are still facing a “cost of living crisis”.

The Leeds West MP said: “Average earnings have finally crept up above CPI inflation, though only when bonuses are included, and there is a huge amount of lost ground to catch up.

“Working people are now over £1,600 a year worse off than when David Cameron came to office and the link between the wealth of the nation and family finances remains broken.”