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London hit hardest as unemployment reaches highest in a decade outside the pandemic - THE STANDARD
Grim landmark makes a December interest rate cut from the Bank of England a near certainty
BY Jonathan Prynn, Business Editor
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London has been hit hardest as the rate of unemployment shot up to its highest level in a decade outside the pandemic, official figures reveal today.
The jobless tally rose from 4.7% to 5% in the July to September quarter with almost 1.8million people classifying themselves as unemployed, according to latest data from the Office for National Statistics (ONS)
It was last at 5% in the December 2020 to February 2021 quarter when the economy was still reeling from the impact of Covid lockdowns.
If the pandemic is excluded unemployment has not been at 5% for almost a decade
The unemployment rate fell after Covid restrictions were lifted but has been on the rise since it reached a trough of 4.3% last summer.
One leading City economist said it was “madness” for Labour to be pressing ahead with the Employee Rights Bill and above inflation hikes in the National Living Wage at a time when the labour market is cooling so rapidly.
Simon French, chief economist and head of research at Panmure Liberum said in a post on X said the combined effects of a slew of extra employment costs, including the increase in employers’ National Insurance Contributions “is far too much to absorb in one go.”
London had the highest unemployment rate of any region in the UK with 6.5%, up 0.5% since the previous quarter. The 341,000 out of work was the highest since early 2021.
Payrolled jobs held by people living in London were down by 20,100 – a bigger fall than any other region in both absolute and proportional terms.
The joblessness spike comes in the run up to a late Autumn Budget that many business leaders have complained has led to a slowdown in activity amid a slew of rumours about potential tax raising measures.
It makes a rate cut from the Bank of England next month a near certainty.
Today’s ONS data also shows another fall in the number of pay-rolled employees with the total falling by 180,000 in the year to October.
Employers have complained they are less likely to take staff on after the hike in National Insurance Contribution rates and the minimum wage, which came into effect in April after being announced in last year’s Budget.
London has been hit particularly hard because of its large numbers of relatively low paid workers in hospitality and retail.
Secretary of State for Work and Pensions, Pat McFadden said:“Over 329,000 more people have moved into work this year already, but today’s figures are exactly why we’re stepping up our plan to Get Britain Working.
“We’ve introduced the most ambitious employment reforms in a generation to modernise jobcentres, expand youth hubs and tackle ill-health through stronger partnerships with employers.
“And this week we’re going further by launching an independent investigation that will bolster our drive to ensure all young people are earning or learning.
“We’re backing businesses to grow and create jobs by cutting red tape, signing trade deals and securing hundreds of billions in investment, which helped make the UK the fastest growing economy in the G7 in the first half of this year.”
The ONS said average regular wage growth also pulled back again, to 4.6% in the three months to September, down from 4.7% in the previous three months. Wages were 0.8% higher after taking inflation into account. Wage growth is now the lowest seen since April 2022.
Professor Joe Nellis, economic adviser at accountancy firm MHA, said: It is clear that businesses are in ultra-cautious mode driven by uncertainty — uncertainty ahead of the Budget, ahead of the Employment Rights Bill, and around the future of work in an AI-driven world.
“For the government, the timing is awkward. The figures land just two weeks before the Autumn Budget, and they sharpen the fiscal dilemma facing the Chancellor. The softening labour data will amplify calls for measures that support job creation, retraining, and business investment to prevent the slowdown from deepening.”
Sam Richards, CEO of pro-growth campaign group Britain Remade, said:“Rising unemployment is the inevitable result of an economy that’s been stuck in the slow lane for far too long. Britain won’t get back to strong, secure growth unless we make it quicker, easier and cheaper to build the infrastructure our economy depends on, from clean energy to transport and new homes.
“Our work with the Community Union shows what’s at stake: if the government delivers on its target of building 1.5 million homes this Parliament, that could mean 400,000 new jobs created in the housing sector and a £38 billion boost to the economy. The fastest way to get Britain back to work is to get Britain building.”
