(Bloomberg) -- U.K. unemployment fell to its lowest level in more than six years and real pay growth accelerated in a boost for Chancellor of the Exchequer George Osborne as he prepares to announce his final budget before the election. Unemployment based on International Labor Organization methods fell 102,000 to 1.86 million in the three months through January, the Office for National Statistics said Wednesday. The jobless rate held at 5.7 percent. Regular pay grew by 1.6 percent from a year earlier, outstripping inflation by the biggest margin since 2008. Osborne is counting on a recovering economy to boost support for his Conservative Party in the knife-edge May 7 general election. In his annual budget to Parliament later Wednesday, he is expected to offer limited pre-election giveaways. With wages rising and slack shrinking in the labor market, Bank of England officials are debating when to raise their key interest rate from a record low. In a separate release, BOE policy makers said the continued strength of the economy could strengthen the pound and increase the chance that low inflation will persist. The nine-member Monetary Policy Committee voted unanimously to keep the benchmark at 0.5 percent this month. Sterling fell against the dollar after the reports and was trading at $1.4684 as of 9:33 a.m. London time, down 0.5 percent on the day. Record Employment Economists had forecast the jobless rate would drop to 5.6 percent, based on the median of 33 estimates in a Bloomberg News survey. In January alone, the rate rose to 5.8 percent from 5.6 percent in December. The number of people in work jumped 143,000 to a record-high 30.9 million in the latest three months. A narrower measure of unemployment showed claims for jobless benefits fell 31,000 in February from January, compared with the median estimate for a 30,000 drop. The claimant-count has fallen for 28 months in a row. In the three months through January, wages including bonuses rose 1.8 percent, compared with 2.1 percent in the fourth quarter. Bonuses were 5.3 percent lower in January than a year earlier. Polls show the outcome of the election will be the most uncertain in decades, with neither the Tories nor the Labour opposition on course to win enough seats to govern alone. Osborne said in a statement the labor-market report is “further proof that the government’s long-term economic plan is working and that British families are seeing the results.� Related News and Information: U.K. Factory Output Unexpectedly Falls on Electronics: Economy U.K. Self-Employment Surge May Not Mean Greater Level of Slack To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net To contact the editors responsible for this story: Fergal O’Brien at fobrien@bloomberg.net Andrew Atkinson

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