Fillip for UK's jobs and finances

THE GOOD times are back for Britain's economy. With less than a month to go before Chancellor Gordon Brown's Budget, a slew of new figures today showed unemployment is falling, inflation pressures are subdued, consumers are brimming with confidence and the public finances are comfortably in the black.

But despite increasing signs that the economy is recovering strongly from last year's slump, the Bank of England appears to be in no hurry to put up interest rates.

Government statisticians said the number of people claiming unemployment benefit unexpectedly dropped by 5,000 to 947,200 in February, just a whisker above the record lows hit last summer. Defying predictions of an increase, the jobless rate was unchanged at 3.1%.

The news suggests firms are hiring again after axing staff during the economic downturn at the end of last year. Economist Don Smith at brokers ICAP, said: 'This highlights the underlying resilience of the economy and increases upside growth potential this year in the event of a continued US recovery.'

Despite the strengthening labour market, wage inflation remains well under control. Annual average earnings growth in the three months to January was 2.7%, down from 3.4% the previous three months and the lowest since 1991. Lower City bonuses than a year ago were responsible for the slowdown.

Meanwhile, the Treasury notched up a better-than-expected £2.4bn public sector surplus in February, taking the cumulative surplus for the financial year to date to £4.7bn. Economists predicted that Brown will easily undershoot his full-year forecast of a £6bn deficit.

And Britain's borrowing binge is not slowing down - Bank lending to consumers surged by a record amount in February. The British Bankers Association said personal lending, which includes mortgages, loans, overdrafts and credit card borrowing, grew by £5.1bn, the biggest-ever one-month increase.

'All in all, today's news tells a strong economic story and the outlook is very favourable,' said economist Brian Hilliard at Societe Generale. The City is betting that interest rates will be raised aggressively as the economy returns to its former strength. But it emerged today that all nine members of the Bank's monetary policy committee elected to keep the cost of borrowing at 4% this month.