(qlmbusinessnews.com Wed. 17th April, 2024) London, UK —
UK Unemployment Rises Amidst Stalled Jobs Market.
The United Kingdom's employment landscape is encountering a downturn as unemployment figures surge, according to recent data.
Between December and February, the unemployment rate escalated to 4.2%, marking its highest level in six months. Concurrently, the percentage of individuals holding jobs experienced a decline, while the economically inactive population, comprising those not engaged in work or job-seeking activities, witnessed a slight increase.
Economists speculate that these statistics could prompt the Bank of England to consider interest rate cuts during the summer months.
Paul Dales, Chief UK Economist at Capital Economics, expressed concerns over declining employment rates, suggesting that this trend might lead to a continued easing of wage growth in the coming months, potentially paving the way for interest rate reductions by June.
Yael Selfin, Chief Economist at KPMG UK, echoed similar sentiments, highlighting that the alleviation of pressure in the labour market could steer the Bank towards implementing a summer rate cut.
While the Office for National Statistics (ONS) acknowledged “tentative signs” indicating a cooling jobs market, it reported a notable uptick in the unemployment rate from 3.9% in the preceding three months to January, surpassing economists' forecasts of a rise to 4%.
Despite this, certain indicators revealed a contrasting trend. While average wage growth, excluding bonuses, witnessed a marginal decrease from 6.1% to 6%, it remained considerably higher than anticipated. Additionally, factoring in inflation, real wages surged by 1.9% in the three months leading to February, marking the highest increase since September 2021.
Chancellor Jeremy Hunt commended the growth in real wages, attributing it to the recent reduction in National Insurance for both employed and self-employed individuals, effective from 6 April. However, concerns lingered over a freeze in income tax thresholds until 2028, potentially subjecting individuals to higher tax brackets as their incomes rise.
Wage growth assumes significance in the Bank of England's deliberations regarding interest rate adjustments, as it can influence inflation dynamics. Despite a recent easing of inflation rates, policymakers remain wary of persistent high pay contributing to a resurgence in inflationary pressures.
The ONS cautioned against drawing definitive conclusions from its figures, citing a smaller sample size of household questionnaires used since the onset of the Covid pandemic. Tony Wilson, Director of the Institute for Employment Studies, advised against over-interpreting short-term fluctuations but acknowledged an overarching trend of a deteriorating jobs market.
Tracy Evans, a 59-year-old former care assistant from Bridlington, shared her struggles with severe long Covid, rendering her unfit for work since January 2021. Despite attempting to return to work last year, staffing shortages exacerbated her health condition, ultimately forcing her to relinquish her job.
Political reactions varied, with Labour's Acting Shadow Work and Pensions Secretary, Alison McGovern, highlighting the toll of long-term sickness on individuals and the economy, attributing it to government mismanagement. Meanwhile, Liberal Democrat Treasury spokesperson, Sarah Olney, criticized the Conservative government's handling of healthcare, citing its detrimental impact on economic recovery.
As the UK grapples with mounting unemployment and economic challenges, policymakers face mounting pressure to implement effective measures to mitigate the crisis and foster sustainable recovery.
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