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Rate Rise Closer

Written By On 10/02/2014

Last month business optimism was apparently at the highest point it had reached in five years according to the Centre for Economics and Business Research.

This was in stark contrast to the same month one year earlier when business pessimism was the worst it had seen for twenty one years.

As confidence increases in the business sector, this will lead to more jobs being created, which in turn will see the jobless total decrease.

Consequently, economic experts are forecasting unemployment to fall below the well documented seven per cent point within the next few months.

This has fueled the debate for many to anticipate interest rates to increase in the not too distant future.

Bank of England governor Mark Carney will be speaking about his forward guidance strategy within the next few days. It is expected he will try and oust the flames of uncertainty as far as interest rate hikes are concerned.

He will probably reassure businesses and individuals alike that the Bank is not under pressure to change rates if unemployment hits seven per cent earlier than originally forecast.

The research company conducted the Business Trends report on behalf of accounting company BDO who advise entrepreneurs and specialise in mergers and acquisitions.

The company's London head of Corporate Finance Peter Hemington commented,

Companies are raising headcounts in response to rising client demand and the data suggests that the unemployment rate is likely to fall below the Bank of England's seven per cent threshold for considering raising interest rates in the very near future.

Chief economist Andrew Smith added,

I think we are still talking about interest rate rises coming in early next year, but with the economy looking perkier than most people expected, and when we issue strong growth numbers in the next six to nine months, it could happen sooner.

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