Jobs market sluggish for Brexit slowdown

Dhaka,  Mon,  24 July 2017
Published : 15 May 2017, 17:53:09
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Jobs market sluggish for Brexit slowdown

British workers should brace themselves for rising unemployment and falling real pay in the years ahead as the impact of a Brexit slowdown is increasingly felt in the jobs market, reports have warned.

The era of rapidly increasing employment is over, according to the forecasting group EY Item Club, which on Monday predicted the unemployment rate will rise from 4.7 per cent now to 5.4pc in 2018 and 5.8pc in 2019.

At the same time, UK firms are planning to give workers a pay rise of just 1pc over the next 12 months, sharply lower than the rate of inflation, which is 2.3pc and expected to rise over coming months.

Pay expectations are now at their weakest in three and a half years, according to the survey of more than 1,000 employers by HR specialists at CIPD and Adecco, the recruitment agency.

“The good news in this latest survey is that employment confidence remains positive, with sectors like manufacturing and production proving particularly buoyant,” said Gerwyn Davies, a labour-market adviser at the CIPD.

“The bad news is that there is a real risk a significant proportion of UK workers will see a fall in their living standards as the year progresses, due to a slowdown in basic pay and inflation increases over the next few months.

“This could create higher levels of economic insecurity and could have serious implications for consumer spending, which has helped to support economic growth in recent months,” warns the Bank of England.

The warnings came as official figures published Tuesday were expected to show inflation higher at 2.6pc in April from 2.3pc in March, putting further pressure on household budgets. It would be the highest since September 2013, when consumer price inflation was 2.7pc.

“The key influences this month are likely to be air fares, utility bills, continued foreign exchange pass-through and petrol prices,” said Alan Clark, an economist at Scotiabank. “As ever, the joker in the pack is likely to be food and possibly also restaurants and hotels.”

Inflation has been steadily rising since the Brexit vote last June, which triggered a sharp fall in the value of the pound, making goods imported from abroad more expensive. Those higher costs are now feeding through to higher shop prices.

 
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