UK employment rises to record high

Vacancies drop

LONDON, Dec 17, (AP): The proportion of people in work in Britain has risen to an all-time high, though a sharp fall in the number of vacancies suggests that employers remained cautious about hiring in the run-up to last week’s general election, official figures showed Tuesday.

The Office for National Statistics said the number of people in work rose by 24,000 to 32.8 million in the the three months to October, pushing the employment rate to the new all-time high of 76.2%. Meanwhile, unemployment fell to 3.8%, its joint-lowest level since 1975.

Though the jobs figures have remained solid over the past few years of Brexit uncertainty, there are concerns about the coming months. That was highlighted by Tuesday’s figures on job vacancies, which fell for the tenth month running, this time by 20,000 from the previous three-month period to below 800,000.

Though much of the uncertainty surrounding Britain’s departure from the European Union has diminished following the overwhelming election victory for Prime Minister Boris Johnson’s Conservatives, there are still worries about the future relationship between Britain and the EU and that could hobble the economy in 2020.

Johnson now has a majority to easily get his Brexit withdrawal bill through the House of Commons in time for Britain to leave the EU by the scheduled departure date of the end of January. After that, Britain is set to remain in the tariff-free single market and customs union until the end of 2020.

Reports on Tuesday indicated that Johnson wants to create a law to ensure that deadline cannot be extended. That has raised concerns in financial markets that Britain could face another cliff-edge moment in just over a year. If no trade deal is agreed on, Britain and the EU would in that situation have to slap tariffs on each others’ goods and impose a series of other barriers to trade. The pound was down 1% at $1.3195 following those reports.

“With Brexit uncertainty already making a comeback and investment set to remain low in 2020, hiring appetite is unlikely to improve significantly any time soon,” said James Smith, developed markets economist at ING.

However Brexit plays out, the Bank of England is widely expected to keep its main interest rate, the bank rate, on hold at 0.75% on Thursday. Though the economy has slowed over the past year, growing by a near seven-year low of 0.7% in the year to October, the jobs figures remain strong and near-term Brexit uncertainty has diminished.

“Demand for labor remains strong enough to stop the (Bank of England) from cutting Bank Rate over the coming months,” said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.

Britain’s financial sector can withstand large shocks and disruptions, whether from a disorderly Brexit or a deterioration in global trade wars, the Bank of England said Monday. In a set of reports and surveys, the central bank said it found that the country’s banks are strong enough to withstand a deep, global recession and market turmoil.

“The core of the UK financial system – including banks, dealers and insurance companies – is resilient to, and prepared for, the wide range of UK economic and financial shocks that could be associated with a worst-case disorderly Brexit,” said the authors of the bank’s Financial Stability Report.

Last week’s general election, in which Prime Minister Boris Johnson and his Conservative Party won a majority, means Brexit is almost certain to go ahead. Johnson has agreed with the EU on a withdrawal deal, with an exit expected by Jan. 31.

But the ultimate nature of Britain’s relations with the European Union and major trading partners has yet to be agreed on, meaning there is still a risk of a disorderly exit.

Meanwhile, other major risks continue to linger, like the tariffs disputes that the United States has been waging against top trading partners.

In a biannual survey of investors’ views of risks, the Bank of England found that confidence in the stability of the financial system remains stable. But they found that politics – like the impasse over Brexit that has market Britain this year – was considered the top risk, along with cyberattacks and geopolitical events, like the trade war or conflicts around the world.

The surveys and reports were carried out before last Thursday’s election.