The United Kingdom’s unemployment rate has fallen below 4% to reach its pre-pandemic level, official data showed Tuesday.
The U.K. unemployment rate dropped to 3.9% in the three months to the end of January from 4.1% in the final quarter of last year, "returning to pre-coronavirus pandemic levels," the Office for National Statistics (ONS) said.
Welcoming the news, Finance Minister Rishi Sunak added he was confident the labor market was in a "good position to deal with the current global challenges."
There are worries that Russia's invasion of Ukraine, soaring global inflation and renewed COVID-19 lockdowns in China will hamper the world's economic recovery.
The ONS added that the number of U.K. workers on payrolls jumped 275,000 to a record-high 29.7 million in February.
However wages are being eroded with Britain experiencing the highest rate of annual inflation in almost 30 years.
"Because bonuses have continued at the high levels for some workers, total earnings growth just kept ahead of rising prices over the past year, though regular pay has dropped again in real terms," said ONS chief economist Grant Fitzner.
The cost of living is set to soar further from April owing to a tax hike on U.K. workers and businesses, plus increases in energy bills.
And the Bank of England is expected to raise interest rates for a third meeting in a row on Thursday to help bring down inflation.
"The further tightening in the labor market in January will only encourage the Bank of England to raise interest rates on Thursday, probably from 0.50% to 0.75%," said Capital Economics chief economist Paul Dales.
