Fall in unemployment masking ‘fundamental weaknesses’ in the economy, Business West warns

October 16, 2014

The economic recovery may not be as strong as anticipated despite the latest fall in unemployment, Business West, the organisation that runs Bristol Chamber of Commerce and the Bristol Initiative, has warned.

While welcoming the 1.6% year-on-year drop in the number of people out of work in the South West, Business West managing director Phil Smith, pictured, said there were still “fundamental weaknesses” in the economy preventing the long-hoped for recovery taking hold.

Figures from the Government’s Office for National Statistics (ONS) on Wednesday showed the jobless rate in the region at 4.6%, having fallen by 0.3% between June and August and 1.6% against the same time last year. Nationally, unemployment stands at 6%, the lowest rate since 2008.

Employment in the South West fell marginally by 0.1% on the quarter to 76.2%, but was up 1.8% on the year. Nationally, the employment rate stands at 73%.

While national youth unemployment was 16%, down from 17.7% in the previous three months, it is still above average unemployment and above pre-recession levels.

Mr Smith said: “National unemployment has plummeted throughout the past year, and the South West is leading this drive with the lowest levels of any English region.

“This aligns with what local firms have told us in the last 12 months as our local business survey has found business confidence and recruitment are up on this time last year.

“However, although these figures show that the UK labour market remains strong, they also show the slowest increase in employment in over a year. This would indicate that growth is easing and that the recovery is not as strong as anticipated.

“Youth unemployment also remains stubbornly high and despite a fall this quarter it still remains above both average unemployment and pre-recession levels.

“Although this continual growth in the labour market is cause for optimism, this is not the only indicator we should be focussing on as there are still fundamental weaknesses in the economy that act as a drag on the long term recovery.” 

Mr Smith’s comments came ahead of a speech today by the chief economist at the Bank of England Andrew Haldane in which he said he was downbeat over the UK economy because of weaker global growth, low wage growth and financial and political risks.


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