Responding to the latest UK labour market statistics, showing unemployment fell by 52,000 to 1.6 million and jobless rate remained steady at 4.8% in the three months to November, Michael Martins, Economist at the Institute of Directors, said:
“The UK’s labour market has held up well since the referendum vote, reflecting the inherent flexibility that allows firms to adopt a ‘wait and see’ approach when faced with uncertainty. Real wages grew at 1.5 percent, and although they are likely to come under pressure with a fall in the pound and the rise in the price of oil, increased access to credit should help to cushion the blow and maintain the UK’s consumption-driven economy, at least in the near future.
“While short-term youth unemployment continues to fall, for 25-49 year olds it has increased by 9 percent since the vote to leave the EU. The construction sector – usually a proxy for costly, long-term investments – has seen the rate of wage growth fall by a third. On the other hand, retail stores, hotels and restaurants, a sector likely to have benefitted the most from the fall in the pound, has seen the rate of wage growth rise by 40 percent since June 2016.
“During the forthcoming Brexit negotiations, the Government should avoid additional initiatives that increase cost pressures facing firms on top of the new Apprenticeship Levy and the £1000 charge for non-EU workers. Ministers should also be thinking about measures at the Budget which help smaller firms, such as raising the business rate relief threshold.”