|"The UK employment rate was 74.1% - the highest since comparable records began"|
Down but Not Out
Brexit may be the biggest risk, but the UK labour market is still healthy.
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While the outcome of the EU referendum in June is affecting the UK economy via its effect on investment decisions and the value of Sterling, there are other things going on that are affecting economic performance. The biggest effect is the state of the global economy, which is important for the UK as an open trading nation.
The IMF downgraded its global economic forecast from 3.4 per cent to 3.2 per cent this year and its UK growth forecast from 2.2 per cent to 1.9 per cent. The IMF still expects the UK to be among the fastest growing advanced economies in the world over the next few years, outstripped only by the US, but weak global growth and uncertainty will not help a speedy pickup in growth.
Nevertheless the UK recovery is still in train and the labour market continues to support it. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.1 per cent, the joint highest since comparable records began in 1971. And the increase in employment is predominantly among full-time workers.
But what about unemployment? The latest set of data shows that unemployment has stopped falling and has been broadly stable at 5.1 per cent since November. That might sound like bad news, but it’s not so simple.
Not everyone in the population wants to work. Some are retired, unable or genuinely don’t want to work and these are excluded from the unemployment calculations. But the latest data shows that the inactivity rate (the proportion of people who are not in work, nor seeking or able to work) has fallen to its lowest recorded level since 1990. So in fact, the unemployment rate has remained stable, despite an increase in the numbers who have re-entered the labour force.
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