“There are no surprises in today’s data as unemployment continues to rise and pay falls back to long-term norms. Nothing here should slow the Monetary Policy Committee on its interest rate path.
“There is some good news, as vacancy numbers have clearly levelled off. In line with business surveys, we expect to see this improve in months to come as firms enter a cyclical upturn in hiring. But it will take more than this to reverse the rise in unemployment. Some of this is driven by a welcome unwinding of the long tail of inactivity that the UK, almost uniquely, saw from the pandemic. But too much of it comes from the caution firms are now showing about hiring.
“What should concern policymakers is that firms can grow by hiring, or by other routes. By structurally raising the costs of taking a chance on people on multiple fronts over the past five years, governments have put the employment chances of those at the margins at more risk, even as these policies favour those in established roles. If politicians don’t want to move to a labour market which tolerates a much higher rate of unemployment, they should stop doing the things that drive it. That should start with the threat to flexible work opportunities posed by the Employment Rights Act’s guaranteed hours proposal.”
