Unemployment in the UK fell by 61,000 in the last quarter of 2007 with the number of people claiming jobseeker's allowance also falling.

The Office for National Statistics revealed that total unemployment fell to 1.61m with the number claiming jobseeker's allowance reducing by 10,800 to 794,600.

The annual rate of average earnings stood at 3.8% in December, down slightly on the previous quarter, which is good news for the Bank of England as it battles to contain inflation.

But with another survey by the Chartered Institute of Personnel and Development revealing that four in 10 companies expect to lay off staff during 2008, there are still fears that the economic slowdown will hit the jobs market.