The Weekly Brief
Thought of the week
The UK continues to grapple with labour supply issues. This chart from the new Guide to the Markets shows how difficult respondents to the Bank of England (BoE) agents’ survey are finding recruitment. A combination of labour shortages and strong demand for workers as the economy reopens means that businesses are struggling to hire, with the survey at the highest level since 2001. This suggests that there is scope for those who were on the government furlough scheme that ended last month to be absorbed back into the workforce. But as we illustrate elsewhere in the Guide, these labour shortages are not uniform. Both geographic and skill dislocations may mean that this additional capacity cannot be swiftly reallocated to the sectors that need it most. This feeds our view that labour shortages will remain an issue; putting upward pressure on wages, inflation and ultimately interest rates.
Hiring difficulties suggest UK labour market tightness will continue