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UK’s Economy Improves As Unemployment Falls To 7 Year Low

United KingdomEconomies all across the world are going through difficult periods of time but Britain’s economy has challenged the global market slowdown and has continued to grow at a slow yet steady pace. Recent data suggest that the unemployment rate in Britain is now at an all time low when compared to the last seven years.

Earlier this year the job unemployment rate in the country was at 5.6 percent and there were concerns over the labour market and the lack of jobs. During the past few months the number of unemployed has significantly reduced and the unemployment rate is now around 5.4 percent which is the lowest it has been since 2008.

The data also confirmed that 73.6 percent of individuals in the age group of 16 – 64 are currently employed and have a source of income. There was only 13.3 percent of individuals in the age group of 18 – 24 were unemployed and the number of unemployed in the age group of 35 – 49 stood at just 3.5 percent.

While the number of employment opportunities have increasing during the past few months, the rise in salaries has not increased all that much. The data collected suggests that salary hikes have gone up by around 2.8 percent when compared to the same period in 2014.

Michael Saunders, an economist who works with Citi stated that the productivity rate in Britain is now at 1.5 percent each year and companies would have to stabilize salary growth to a minimum of 3.5 percent each year if they are to meet the Bank of England’s 2 percent inflation target.

In a statement, Michael Saunders from Citi said

The current pace of pay growth is well below that benchmark, hence reinforcing the prospect that inflation will stay below the 2 per cent target for an extended period.

UK has managed to control its inflation rate which means the 2.8 percent salary hike will allow workers in Britain to have extra money to spend and improve their standard of living.

The UK government had earlier announced that they planned to increase the minimum wage by 2020 and fix it at £9 per hour for employees who are over 25 years of age. Economists believe that this rise in minimum wage will impact companies and could significantly reduce employment opportunities by 2020 as they expect around 60,000 jobs to be dropped. Some analysts believe that it is difficult to make an accurate estimate for 2020 due to the volatility of the global economy.