The latest set of indifferent UK economic statistics – Unemployment, Inflation and the Bank of England
The headlines are that unemployment has fallen again in February, by a whopping 3,000 and added to the fall of 7,000 in January is being highlighted as a sign that the things are getting better in the UK economy. The base on which the fall has taken place is around 2.5 million so the impact is really negligible. There are more serious issues behind the numbers such as; those receiving job seekers allowance rising by 23,500 to 1.64 million, and the consistently high figures of longer term unemployed. The hidden figures which are not counted are the “underemployed”, where employers have had to scale back hours in an effort to keep all their employees in work. The impact is lower take home incomes adding to the pressures on individual households and consequently lower consumer spending.
On the other hand, the head of the Bank of England, Mervyn King, had to officially write to the Chancellor again as inflation has risen to 3.5%, above the 2% Government target. Many expect this to be a temporary increase driven by factors such as the rise in VAT to 17.5% and higher fuel and transport costs.
Higher inflation and low interest rates – whilst good for those with mortgages and property in general is bad for consumers as the cost of living increases and the value of savings is eroded.