After all the excited chatter about Britain’s recovery from shallow recession, we’re back to earth with a bump. An update from the Office for National Statistics (ONS) reveals that, while GDP is on the up, all is far from rosy in the garden of UK plc.
The rate of unemployment increased to 4.3 per cent between January and March, while the long-running decline in vacancies also continued, with 898,000 openings during the reporting period, down 26,000 on the previous three-month spell and (more importantly) down 188,000 compared to a year earlier. The number is still 102,000 above the pre-pandemic level, but we are now a long way from the brief period when the number of available jobs comfortably exceeded the number of unemployed people. Meanwhile, the latest claimant count stood at nearly 1.6 million.
One reason for the increase in joblessness despite the economy picking up is that unemployment is a lagging indicator. Employers usually try to avoid firing people until they absolutely have to because redundancy programmes are expensive, disruptive and sap the morale of remaining workers. Having to find new people if you get it wrong is similarly costly and disruptive. What we are seeing here is some delayed fallout from last year’s recession.
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