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Unemployment unexpectedly fell by 7,000 to 2.46 million between September to November, according to figures from the Office for National Statistics (ONS).

This is the first quarterly fall since the three months to May 2008.

Yvette Cooper, secretary of state for work and pensions, says: ‘The jobs market is still tough for a lot of people, but the drop in unemployment and youth unemployment is very welcome. It means 450,000 fewer people are out of work than everyone expected last spring.’

David Kern, chief economist at the British Chambers of Commerce (BCC), says the fall in unemployment raises hopes that next week’s GDP figures will confirm that the recession is over.

However, think tank the Centre for Economics and Business Research warns that further falls in unemployment are unlikely. ‘The low rate of new job creation is likely to keep the labour market subdued for a long time. Public sector cuts following the general election could also extend falls in employment into 2010 and 2011, weakening an already fragile recovery,’ it adds.

There are further concerns about the long-term unemployed, whose numbers swelled last qarter. Those out of work for more than 12 months increased by 29,000 to reach 631,000, the highest figure since the three months to November 1997, according to the ONS.

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