The Bank of England has announced that it will not raise interest rates until unemployment has fallen below 7%.
Last months labour market statistics show unemployment at 7.8%, to reach this target the UK will need to generate 750,000 more jobs. The Bank of England predicts that unemployment levels will reach this target by 2016.
The Bank said:
"While job growth has been a relative positive in recent years, unemployment is still high.
"There are one million more people unemployed today than before the financial crisis; and many who have jobs would like to work more than they currently can. The weakness in activity has also been accompanied by exceptionally weak productivity. It is for these reasons that the MPC [monetary policy committee] judges there to be a significant margin of slack in the economy, even though the extent of that slack, particularly the scope for a productivity rebound, is very uncertain."
Frances O'Grady General Secretary of the TUC (Trades Union Congress commented:
"The fact is real wages are set to continue falling throughout 2013 - the longest pay squeeze in over a century - and the Bank does not expect unemployment to fall significantly for another three years.
"People will ultimately judge the recovery on the availability of good jobs and whether their disposable income is rising again, rather than economic forecasts and partisan spin."
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