The number of vacancies is falling just as the unemployment rate is rising and the employment rate is dropping significantly. Average earnings are also still at a record high, suggesting that even with an increasing pool of unemployed people those in work with the right skills can and are demanding higher wages to make up for the huge spike in inflation.
For the Bank of England this is a dilemma because it seems it will have to squeeze the economy more, if it wants to squeeze inflation out of the system. It is difficult to get rid of inflation if those in work can still demand and get higher wages, even as the dole queues lengthen.
It perfectly illustrates the wider problem for the UK economy, how can it have a shortage of skilled workers when unemployment is rising, when the economy is barely growing and when wages are rising?
The answer is that it is completely unbalanced.
The states capacity to provide what the economy needs, be it infrastructure, training, investment, a skilled workforce or even a well functioning court system has been hollowed out. Water and power systems are not trusted, registering a new company now takes longer because of staff cuts, so does paying tax or getting a doctors appointment. The government has no growth policies, has made terrible education and training decisions, wrecked the housing market, and is obsessed with reducing headline immigration when it knows full well the country is desperate for more workers.
All these things mean the economy seems incapable of growing at a sustained high rate, it cannot even manage a low rate for very long.
At any other time this would be regarded as a crisis needly urgent structural reform and a government of singleminded determination to force through the necessary changes. It is not even on this government’s radar.
Regardless of your political hue, that is very worrying. Look at Germany, it cannot yet decide on how to reform the economy but it knows it has too. Here the debate has not even started, yet these problems have been self evident for years now.
The Bank of England only has one tool at its disposal, the government has dozens, yet does not know how to use them.
The longer we wait the worse it will get.
Economics, trade and Brexit, not necessarily in that order but the dog always comes first.
By Jonty Bloom Media
Such a powerful analysis in so few words. Who needs the FT!