March 28, 2024

Britain’s Jobless Rate Rises, to 4.4%, for First Time in 2 Years

Households lost spending power last year because of a jump in inflation, caused by the fall in the pound after the British vote to exit the European Union.

But the Bank of England expects pay to pick up soon, a big reason it says interest rates are likely to rise faster and to a greater extent than it thought until recently.

“With wage growth stuck in neutral, policymakers will need to think very carefully about a rate hike in May,” said Maike Currie, an investment director at Fidelity International.

The number of Britons in work grew less than expected, rising by 88,000, about half the consensus forecast in a Reuters poll of economists.

The O.N.S. attributed the rise in unemployment to fewer economically inactive people — those neither working nor looking for a job — entering unemployment, rather than employed people losing their jobs.

Workers’ total earnings, including bonuses, rose by an annual 2.5 percent in the three months to December, as expected and unchanged from the three months to November.

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Officials from the Bank of England may take encouragement from pay increasing 2.8 percent on the year in December alone. But that was still weaker than the 3 percent reading of British consumer price inflation for December.

Excluding bonuses, earnings rose by 2.5 percent year on year against expectations for a 2.4 percent rise.

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The O.N.S. said the number of European Union nationals working in Britain rose by an annual 4.5 percent over the fourth quarter, the smallest increase since the third quarter of 2013. The number of Eastern European workers fell.

Overall migration data have shown a drop in net migration from the bloc into the Britain since the “Brexit” vote.

The O.N.S. also published its first estimate for productivity in the fourth quarter.

Output per hour — the main measure of productivity — rose 0.8 percent in the three months to December from the previous three months, slightly slower than the third quarter’s 0.9 percent rise. That marked the strongest two quarters for productivity since the 2008-9 recession, the O.N.S. said.

Separate figures showed that Britain’s government recorded a January budget surplus of 10 billion pounds (about $14 billion), slightly bigger than forecast, helped by a surge of income tax receipts that typically comes at the start of the calendar year.

With two months left in the 2017-18 financial year, cumulative borrowing now stands at 37.7 billion pounds (about $52 billion), down 16 percent on the same point a year ago.

In November, the official budget watchdog had forecast borrowing of 49.9 billion pounds (about $69 billion) for the full year.

The finance ministry said Wednesday’s figures were considered strong.

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Article source: https://www.nytimes.com/2018/02/21/business/economy/uk-jobless-rate-wages.html?partner=rss&emc=rss

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