The UK employment figures were released this morning and came in slightly better than expected.
Expectations for the October rate were at 5.1%, but instead the figure released this morning came in at 4.9%. However, that’s still up from the previous figure of 4.8%, so more people are becoming unemployed.
That’s reflected in the number of redundancies which hit a record high of 370,000 in the same period. As you’d expect, the hospitality sector was the worst hit, making up a third of the job losses.
To put this in perspective, that’s 819,000 people since the start of the pandemic that have lost their job.
With almost a million people now out of work, who were employed before all this began, there’s going to be pressure on Rishi Sunak, the Chancellor of the Exchequer. Many people will say he acted too late to put measures in place to support jobs.
During a lot of the period covered by this morning’s data, it was looking like Sunak was not going to extend the schemes that were due to expire on 31 October. So you can imagine the uncertainty that created for employers.
Now we’re seeing many more areas, including London, heading into Tier 3 lockdown restrictions, which is the strictest tier. That puts 10.8 million more people into Tier 3.
We already saw recently that the jobless rate is expected to rise to 7.5%, so tough times are still to come.
Martin Wolf at the FT summarised the government’s position nicely in an article earlier in the week. He pointed out that the government can currently borrow at a real rate of -2% and they need to make use of that.
A paper from Summers and Stansbury at Harvard, argues that no monetary policy can deliver full employment without dangerous side effects, including financial instability.
Therefore, fiscal policy is the only sensible option. In fact, another paper shows monetary policy can’t be effective anymore at all. So even if the Bank of England chooses to take action, it’s unlikely to have the needed impact.
This, along with the fact that a no deal Brexit is expected to make GDP and the jobless rate even worse, means the ball is firmly in the governments court right now.