UK Unemployment Will Hit Bank of England's 7% Threshold By End 2014

The majority of economists in a Reuters poll believe that Britain's unemployment rate will hit 7% within the coming months, well ahead of the Bank of England's schedule.

According to the poll of over 50 economists, Britain's current unemployment rate of 7.1% will steadily fall in the coming months and reach Mark Carney's pledged rate for considering interest rate rises of 7% early next year.

Some 35 out of 50 economists polled by Reuters said they do not think the Monetary Policy Committee would lower the jobless threshold.

Those that thought it would be altered plumped for a reajustment to 6.5%.

The results suggest that traders and investors in financial markets may have been premature in pricing in a rate rise as soon as the end of this year.

Paul Fisher, a member of the Bank's Monetary Policy Committee, said: "Even if the 7% unemployment rate threshold were to be reached in the near future, I see no immediate need for a tightening of policy.

With inflation back at the Bank of England's target rate of 2%, and UK economic output still below its pre-2008 peak, Fisher said that "we are still some way off the point where it is appropriate to start raising bank rate and that when it is time, it would be appropriate to do so only gradually."

According to the Bank of England's minutes from its January meeting of the monetary policy committee (MPC), prudence was a recommended strategy.

"The relative success of the long-term unemployed in finding jobs suggested that labour market slack might not have been eroded as much as the fall in the headline unemployment rate appeared to imply," said the MPC.

"The Committee noted that while the recovery was becoming more firmly entrenched, productivity growth had been disappointing, and unemployment had fallen faster than expected," it said.