Chancellor John Healey has inherited an economy in “dire straits” from predecessor Rachel Reeves, with unemployment stubbornly high, the Tories have warned. Britain’s overall rate of unemployment held steady at 4.9% in the three months to May, figures from the Office for National Statistics (ONS) showed.
The number of workers on UK payrolls fell by a better-than-feared 4,000 between May and June to 30.3 million. Job vacancies have fallen back further, as under-pressure small businesses rein in hiring in the face of rising costs and higher wage bills. There were 7,000 fewer vacancies in the quarter to June, at 712,000, following a 19,000 drop in the previous three months.
Small businesses drive vacancy decline
This was driven by smaller businesses, which saw vacancies fall 8,000, though this was partially offset by an increase among medium-sized firms, the ONS said.
Andrew Griffith, the Shadow Business Secretary, said: “Today’s figures do not change the fact that the latest Labour Chancellor has inherited an economy in dire straits. The Employment Rights Act is already increasing costs and complexity for employers, and risks choking off future job creation. Any improvement is despite Labour’s policies, not because of them.”
Experts warn of potential further hit
Experts said the figures signal the worst of the jobs market decline may be over, but warned of a possible further hit if the ongoing Iran war sends inflation soaring.
Matt Swannell, chief economic adviser to the Item Club, said: “There are some signs that the deterioration in the labour market has bottomed out. But we think this will prove a temporary respite, and with a sustained reduction in the use of Strait of Hormuz looking increasingly likely, we expect high energy prices to weigh on growth and the jobs market.”
The ONS figures will be watched closely by policymakers at the Bank of England ahead of its interest rate decision on July 30.
