LONDON (AFP) – Britain’s unemployment rate has fallen further to a near five-decade low, official data showed yesterday, but the value of wages continues to erode as inflation soars.
The unemployment rate eased to 3.7 per cent in the three months to the end of March, the Office for National Statistics (ONS) said in a statement, sending the pound rising against the dollar on expectations of another interest rate hike.
That was the lowest level in more than 47 years and compared with a rate of 3.8 per cent in the quarter to the end of February.
Bank of England (BoE) Governor Andrew Bailey on Monday warned that fallout from surging prices driven by the Ukraine war would cause unemployment to increase.
He described as “apocalyptic” the situation surrounding soaring food costs – which he said were fuelled by major wheat and cooking oil producer Ukraine finding itself unable to export its goods.
Addressing British MPs, Bailey spoke also of a “very real income shock” coming from surging energy and food prices.
While average wages are rising in the United Kingdom (UK), the ONS yesterday said they continued to sink in real terms as Britain, like other countries, faces runaway inflation.
The pound yesterday rallied 1.3 per cent to USD1.2480 as traders bet that soaring inflation, lifted in part by UK wage rises, would force the BoE to raise interest rates further, despite growing fears of recession.
“There continued to be a mixed picture for the labour market,” said ONS Director of Economic Statistics Darren Morgan. Total employment remained below its pre-pandemic level, with job vacancies at a record-high of almost 1.3 million at the end of April.
“Indeed, with the latest fall in unemployment to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began,” Morgan said.