By Jonathan Davies

The rate of unemployment in the UK fell to 5.7% in the three months to December, according to the Office for National Statistics (ONS).

The ONS said that the number of people out of work dropped by 97,000 to 1.86 million.

There are also growing signs that the public are feeling the benefits of the economic recovery, with wages once again growing faster than inflation.

Despite falling unemployment in recent years, the government has been criticised for low, real-term wage growth.

But with inflation falling closer to negative inflation, the ONS said pay including bonuses was up 2.1% and 1.7% excluding bonuses. It signals even stronger real wage growth for the public.

John Cridland, CBI Director-General, said: “The recovery is now established and businesses are continuing to create more full time jobs.

“While it’s good to see unemployment falling we still need to see more young people finding roles, especially those that help them develop their skills and progress up the earnings ladder."

John Allan, FSB National Chairman said: “Today’s figures show that the UK labour market finished last year on a high note. Many of our members have told us that they intend to expand their businesses and hire staff this year, and so we would expect these positive trends in the headline jobs data to continue in the coming months.

“There is also cause for optimism on pay. These statistics show that pay has increased by 2.1 per cent in a year, and with record low inflation the growth in real wages should start to gain some much-needed momentum. Our research shows we are also starting to see modest gains in small business productivity, which will be critical if companies are to afford further wage increases in the near future.”

Jeremy Cook, chief economist at the international payments company, World First, said: “Wages are growing at their best level in three-and-a-half years and inflation is at the lowest level on record; consumers are in a very good position and so are the prospects for the UK economy.

“Real wage increases, currently at the best levels in nearly seven years, represent a silver bullet for the wider UK recovery."

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