UK unemployment to fall sooner - poll

London - British unemployment is expected to fall to the Bank of England's 7% threshold for lifting interest rates earlier than the central bank expects, a Reuters poll found on Wednesday.

The poll of 45 economists, taken this week, found all but a handful saying the unemployment rate would reach the Bank's target ahead of its late-2016 prediction - the point where it said it would consider raising interest rates.

Those views were collected before data on Wednesday showed unemployment unexpectedly fell to 7.7% in July, its lowest since late last year. That spurred more bets in financial markets the Bank would raise rates sooner than it suggested.

"The key thing is that there isn't a distortion in these numbers. There's strong employment growth led by full-time employee jobs, not part-time or self employment. Vacancies remain elevated so it's a solid report," said Ross Walker at RBS.

"On that basis the market is going to further question the validity of the dovish guidance and its longevity."

Bank of England Governor Mark Carney said last month Bank Rate would stay at its record low of 0.5% at least until unemployment fell to 7% or below, something he said could take three years to achieve.

But over half of the respondents in the poll said the jobless rate would hit 7% before the end of 2015, and only five said it would be November 2016 or later.

With some traders gambling the Bank may raise interest rates late next year, market rates have steadily risen, pushing up gilt yields, and economists in the poll were divided as to how much risk that posed to the economic recovery.

Ten respondents said it was high, 11 said neutral and 10 said low. None said it posed a very high or very low risk.

Recent data have suggested Britain's economic recovery is getting evermore solid.

After expanding 0.7% in the three months to end-September, matching the previous quarter's bumper growth, it will grow by 0.5% per quarter through to early 2015, according to the poll.