UK Unemployment Falls Below Pre-Pandemic Levels

UK Unemployment Falls Below Pre-Pandemic Levels

Tuesday 15th March 2022 – 08:05 (GMT)

Figures released by the National Statistic office indicated UK unemployment has fallen to levels not seen since the start of the coronavirus pandemic. During the three months between November and January, the overall rate fell to 3.9% – better than the 4% level anticipated and immediately sent GBP higher.

The latest data will give further confidence to the Bank of England ahead of Thursdays interest rate vote, with the central bank now widely expected to raise its base rate by 0.25% – taking it from the current level of 0.5% to a post-pandemic high of 0.75%.

Job vacancies also continued to climb as the number of candidates available for roles remains low. Employees are reportedly more receptive to flexible working and reduced hours as they attempt to keep existing staff happy amidst the shortage.

Additionally, the annual growth rate for average total pay (including bonuses) increased to 4.8% in the three months to January. This was faster than expected and up from a rate of 4.3% in the three months to November, but in real terms take home pay actually fell due to higher inflation over the same time frame.

Against a backdrop of soaring energy bills and the rising cost of the weekly shop, the ONS said annual growth in regular pay (excluding bonuses) fell by 1%. After adjusting for its preferred measure of inflation in the three months to January, this represents the biggest fall since July 2014.

A squeeze on living standards is a challenge for Prime Minister Boris Johnson who only last month authorised financial support for households to meet surging energy and food bills. The conflict in the Ukraine has further compounded the issue, with the UK banning Russian oil imports, and economists are now looking to the government for further intervention.