Early this year Britain’s unemployment rate fell to its lowest since the mid-1970s as employers hired in the run-up to the original date for the UK’s departure from the EU, but there were signs that Brexit was beginning to weigh on the jobs boom.
The rate edged down to 3.8 per cent in the first quarter, its lowest since the three months to January 1975, the Office for National Statistics said on Tuesday.
The North’s unemployment rate dropped to 2.9 per cent between January and March, significantly below the comparable UK rate of 3.8 per cent. The total number of people who were out of work in the first quarter of the year in the North was estimated to be 26,000
Unemployment in Britain dropped by 65,000, the biggest fall in more than two years. But employment growth slowed to 99,000, well below a median forecast of 135,000 in a Reuters poll of economists, and wage growth lost momentum too.
"It is possible to see the shadow of Brexit in some of these figures," Mike Jakeman, an economist at accountancy firm PwC, said.
“March was the month when Brexit anxiety was at its most acute, and it might have been the case that firms were more reticent to offer higher wages and advertise new positions.”
Resilient market
The numbers could just as easily be a minor blip in the recent run of strong jobs and earnings growth, he added. Britain’s labour market has remained resilient as Brexit has neared, helping households whose spending has driven an otherwise fragile economy.
However, the jobs boom may well reflect how employers have opted to take on workers – who can be laid off quickly during a downturn – rather than commit to longer-term investments while they wait for uncertainty over the conditions of the UK’s departure from the European Union to lift.
Brexit was originally due on March 29th. Last month it was delayed for a second time until October 31st to give prime minister Theresa May more time to break an impasse over its implementation in parliament and in her own Conservative Party.
The strength of the labour market has pushed wages up more quickly than the Bank of England has forecast, leading some economists to think it might raise interest rates faster than investors expect once the Brexit uncertainty clears. – Reuters
