The number of people unemployed in the UK declined by 20,000 to 2.45 million in the quarter to August, according to the Office for National Statistics (ONS).

This decline means that the unemployment rate has fallen from 7.8% to 7.7%. However, the claimant count - those out of work and receiving unemployment benefit - rose by 5,300 in September to 1.47 million.

"These figures are slightly better than expected. Employment is up, unemployment is down, and there has been a further fall in the level of inactivity," said David Kern, Chief Economist at the British Chambers of Commerce.

"However, there are also some negative features. The recent increases in total employment were mainly driven by part-time workers, the number of which has increased to its highest level since records began in 1992. Furthermore, the number of people working part-time because they could not find a full-time job is also at a record high."

There are fears among some economists that unemployment will rise once the full effect of government cuts begin to be felt.