Op-Ed: Claims UK jobless total is falling sparks interest rate rise fear

Posted Nov 13, 2013 by Eileen Kersey
News that unemployment in the UK is apparently falling is a mixed blessing. The Office of National Statistics, ONS, reports the jobless rate is down for the third quarter in a row to 7.6 percent, the lowest since 2009.
National Archive
Some view this as a sign that the UK is on the road to "recovery" and the news will no doubt be used for political means by the Tory Lib Dem coalition with a general election scheduled for 2015.
Figures are often manipulated though and less people eligible to "sign on" as unemployed in the UK do so these days. This means that the number of "claimants" may be down but the number of people in proper paid work is not really increasing. In fact the UK has turned into a nation of temporary and part-time workers.
For many, claims that unemployment is falling are pointless. If you are unemployed and your partner works full-time you will get basic "dole" for six months and then nothing. For some claimants this is not worth the hassle. They do not sign on as unemployed. If you work part-time or on a temporary contract you will also be classed as employed.
Unemployment is a minefield and the criteria is constantly amended to make sure government figures always come up smelling of roses.
When Mark Carney, the Canadian deemed the only person qualified enough to take on the Bank of England, overly paid, leading role, announced a few months ago that the benchmark for setting interest rates was changing many people smelled a rat.
Chancellor George Osborne tried to spin the news and throw his backing behind the move.
If you ever looked at why, open your eyes.
The interest rate used to be set against the "cost of living". The rate of inflation. Although inflation had been low for some years jobs were apparently scarce. Carney claimed that using the level of unemployment would prevent interest rate rises until the British economy was in recovery. Personally that now seems hogwash.
The government's Help To Buy scheme is fuelling another housing bubble and higher interest rates will suit the banks and investors.
The rate of inflation is snowballing out of control. Energy prices are up an average of 10%. Basic travel and food costs have risen. Even the cost of dying is out of control.
Yes, it was better for some to set the level of interest rate against the jobless rate but better for whom?
Certainly not the young house buyer with a large mortgage. Certainly not a low-paid worker, especially one in the public sector experiencing a pay freeze.
Better of course for the elite and wealthy who are getting little return on their fortunes.
British interest rates are at an all time low but they could soon rise. In August Carney predicted that "probably" would not happen for around three years. Don't hold your breath we say.
Early Wednesday Bloomberg reported that "The figures come as Bank of England Governor Mark Carney prepares to unveil new forecasts. Economists say officials will raise their growth forecasts and project unemployment reaching the 7 percent threshold for considering interest-rate increases sooner than they previously indicated. The central bank will release its quarterly Inflation Report at 10:30 a.m. in London"(See featured video).
The government continues to squeeze the poor, unemployed and vulnerable of the UK and if, or should that be when, interest rates start to rise the pain will be severe.
Pundits do not expect the rises to be anything like those in the 80s when interest rates hit around 15% but even so mortgage holders will take a hit.
So yes it is good news that the jobless rate is falling but two questions remain -- is the fall real and when will interest rates rise?