UK jobless rate drops to 50-year low of 3.7pc

THE UK posted its lowest unemployment figures in almost 50 years yesterday, as the rate fell to 3.7pc from January to March.

There are now fewer unemployed people than job vacancies across Britain, which is a first since records began.

But the Office for National Statistics’ rosy outlook came just a day after the Bank of England warned the country is facing the prospect of increased unemployment.

Governor Andrew Bailey told the Commons Treasury Committee on Monday that ‘the real income shock’ of inflation will mean more people being forced out of work.

It comes after last week the Bank of England predicted unemployment will jump to 5.5pc within the next three years – the highest level in a decade.

This would see more than 500,000 Britons lose their jobs in the largest wave of redundancies since the financial crisis.

Neil Wilson, analyst at Markets. com, said: ‘No one knows what will happen. But the economy will slow, and unemployment will rise. The numbers yesterday have to be taken with a pinch of salt.’

Yesterday’s ONS figures revealed the number of employees switching jobs increased to a record high of 994,000 during the first quarter. People moving from economic inactivity to employment also soared, as 29.5million were included in the most recent estimate for pay-rolled staff.

Capital Economics’ chief UK economist Paul Dales said the latest figures prove the Bank of England will have to raise interest rates further, perhaps to 3pc in 2023.

The Bank of England has already raised interest rates from 0.1 per cent to a 13-year high of 1 per cent.

Rising wages were a striking feature of the ONS’ report as it said growth in employees’ average total pay reached 7pc in Q1.

On Monday, Bailey said higher earners should ‘think and reflect’ before asking for salary hikes. He said he has rejected an increase on his annual salary of £570,000.