Interest rate speculation as unemployment falls by 7.1%

Unemployment has fallen by 7.1% - the second biggest fall on record. Credit: Press Association

Unemployment fell by 167,000 between September and November to 2.32 million, a rate of 7.1%, official figures showed - the second biggest fall on record.

It is close to the 7% figure at which the Bank of England has said it will consider raising interest rates.

The figures are welcome news for those with new jobs - and for the government.

But it is a problem for the Bank of England, which today reassured those with mortgages that there is no pressing need to raise rates.

Political Editor Tom Bradby reports:

David Cameron welcomed the news, tweeting that more jobs mean "more security, peace of mind and opportunity for British people".

Read: Unemployment figures: Full regional breakdown

The TUC General Secretary Frances O’Grady said that falling unemployment followed by an early Bank interest rate rise would "clobber mortgage holders and businesses".

The Trade union boss said: “..while headline unemployment is within a whisker of the Bank’s forward guidance threshold, an early interest rate rise would clobber mortgage holders and businesses – jeopardising our economic recovery.

“Patchy levels of jobs growth in parts of the north and the continuing squeeze on living standards should make the Bank of England think twice before considering a rate raise.”

Read: Economic Editor Richard Edgar's blog: Will interest rates now rise?