Has the economy already won the UK election?

Labour not engaging 'sensibly' in political debates: Ocado boss
Labour not engaging 'sensibly' in political debates: Ocado boss

A string of positive economic indicators for the U.K. economy could give the country's ruling Conservative party a boost ahead of a general election which a leading figure in British business has described as the most important in decades.

The U.K. unemployment rate fell more than expected in the three months to December, official figures showed Wednesday, to hit 5.7 percent. This was below analyst forecasts of 5.8 percent and marked the lowest level since 2008.

It came as employment in the country surged over the period – some 103,000 more people were in work than in the previous three months.

In yet more good news for the economy, a key element of the data release also showed that earnings growth in the country was well above inflation. Earnings including bonuses increased 2.1 percent in the three months to December on a year earlier – compared to annual consumer price inflation of just 0.3 percent in January.

Howard Archer, chief U.K. economist at IHS Global Insight said the figures were a "double dose of good news."

"Earnings growth is now markedly above inflation, which is very good news for households and for consumer spending prospects in 2015," he said in a note.

"It is also potentially good news for the government as the Conservatives and Liberal Democrats will both be hoping that rising real earnings growth will make people feel happier about life and more inclined to vote for them as May's general election draws ever closer."

Kathleen Brooks, research director at agreed, adding: "This (data are) good news for the consumer, and also for Prime Minister David Cameron as we lead up to the May General Election."

'Most important in 30 or 40 years'

Britons vote for their next government on May 7, and opinion polls appear to show that there is still everything to play for. Results from a Guardian/ICM poll, published Monday, put the Conservative Party – which rules in a coalition government with the Liberal Democrats -- four points ahead of the opposition Labour Party. However, Reuters reported that two different polls put Labour in the lead.

It comes as the former boss of British retail stalwart Marks & Spencer, Stuart Rose, told CNBC that the upcoming U.K. general election was "incredibly important."

Rose, who is currently chairman of online supermarket Ocado, called for a debate over policies in an effort to discern what was right for the U.K. and its businesses.

"We've got an incredibly important election coming up. It's probably the most important we've had for 30 or 40 years," he told CNBC Wednesday. "Let the parties put their policies out. Let's have that debate."

Last month, the former leader of the ruling Conservative Party, William Hague, told CNBC that the election looked to be "one of the closest" he could recall.

Rate hike on the horizon?

A man sits on a bench outside the Bank of England in London.
Ben Stansall | AFP | Getty Images

Another issue the UK is also grappling with the problem of when to next raise interest rates.

Low inflation figures have pushed back expectations of a hike, and last week the Bank of England suggested that there wouldn't be an interest rate rise until mid-2016.

Minutes of the central bank's latest policy meeting, published Wednesday, revealed that all nine members of its rate-setting committee voted to keep rates at record lows.

However there were signs of some disagreement among the Monetary Policy Committee, with two members saying their decision was "finely balanced."

"Given the outlook for inflation beyond the short term, there could well be a case for an increase in Bank Rate later in the year," they said, according to the minutes.

The members were not named, but Martin Weale and Ian McCafferty repeatedly voted for a rise in interest rates during the second half of 2014.

While in contrast, one committee member said the loosening of monetary policy remained on the cards.

"For one member, the next change in the stance of monetary policy was roughly as likely to be a loosening as a tightening," the minutes said.

- By CNBC's Katrina Bishop