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BCC reacts to December’s ONS Labour Market Data

Commenting on the ONS Labour Market statistics for December 2021, BCC Head of Economics, Suren Thiru, said:

“Rising payroll employment and falling unemployment confirm that the UK jobs market has continued to rebound strongly despite a slowing recovery and the end of furlough.

Record vacancies underscore the severe recruitment crunch facing businesses. Although the changes to Covid self-isolation rules are welcome, with coronavirus and Brexit driving a structural decline in available labour, staff shortages may persistently constrain economic activity.

Although labour demand remains robust, Plan B may damage the jobs recovery by squeezing hiring intentions in those sectors most exposed to the new measures, including hospitality and retail, by diminishing their cashflow and dampening customer demand.

“While current labour market trends provide no barrier to raising interest rates, uncertainty over the economic impact of the Omicron variant means a December rate hike is unlikely. Interest rates may start rising from February 2022, but only if concerns over the new variant have faded.

“More support is urgently needed to aid those firms worst effected by Plan B, including returning VAT for hospitality and tourism back to its emergency rate of 5%, reinstating full business rates relief for these firms and making additional grant funding available.”

The full ONS data can be found here.

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