HomeCoronavirusDon't be fooled – under Covid-19, the UK labour market is in...

Don’t be fooled – under Covid-19, the UK labour market is in crisis

Rishi Sunak knows it. Andrew Bailey knows it. Every economic pundit knows it. The UK labour market is facing its grimmest period in decades. It is not a question of whether the dole queues will lengthen markedly, but by how much and when.

A cursory glance at the latest data produced by the Office for National Statistics would suggest the outcome is not going to be all that bad. Unemployment, on the internationally agreed measure, remains below 4%, and has barely budged since the arrival of Covid-19 earlier this year. Employment was down 220,000 between the first and second quarters of 2020, which doesn’t look that terrible given that the economy contracted by a fifth over the same period.

But don’t be fooled, because neither the chancellor nor the governor of the Bank of England is taken in by these encouraging-looking figures for a minute.

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