Daily Management Review

Pre-Recession Alarm Lurks Behind Britain’s ‘Headline Employment Figures’


03/12/2019


Uncertainties of Brexit slow down Britain’s economy, although 2018’s employment figures seemed promising. Nevertheless, researchers find that policymakers may have to worry about something else.



The headlines of a strong hold in Britain’s labour market are doing the round, while hiding beneath it the flow of U.K.’s businesses and jobs’ scenario. Casting at glance at the graph of job’s creation and destruction pattern in the U.K, it appears to indicate the onset period of a recession, revealed a research on Monday, 11 March 2019.
 
British employers contributed to nearly four hundred thousand job creations last year which pushed the “jobs rate” to a “new record high”. This has been a positive turn in an economy that is being weighed down under the Brexit woes and “weakening global trade”.
 
However, the “Enterprise Research Centre” is a “research network” whose academics reported of the “unpromising signals” as they looked closer into the “jobs data” splitting it “between new and existing firms”. As a result, start-up ventures added nearly one million jobs in the year of 2018, thus it cancelled out a “net 613,000” employment drop across “established companies”.
 
Unfortunately, there looms a doubt about this being sustainable, as the rate of creation as well as the termination of businesses seems to be “converging” now. And this pattern is often related to be the harbinger of an economic recession, especially when the number businesses closing down overtakes the number of the ones being created.
 
According to the “authors of the report”, the above mentioned trend needs to be look at from a “longer-term context”, instead of categorising it as a repercussion of “temporary Brexit uncertainty” that sweeps across the economy.
 
Mark Hart is an entrepreneurship’s professor at the Aston Business School, who stated that the current employment record could provide a “false sense of security” to the policymakers, as he added:
“Even if our headline employment figures are being propped up by start-ups creating new jobs, we are already witnessing a severe slowdown in hiring by the established firms that are vital to the health of our economy”.
 
Recently carried out “short-term” surveys of businesses revealed that the employment rates have fallen, while most see this drop as a reaction to the uncertain Brexit that lies ahead. The due date for Britain’s official exit from the EU bloc is on March 29, 2019, whereas the British Prime Minister, Theresa May, has made a provision for delay due to “her inability to secure parliamentary ratification of the deal so far”.
 
The growing uncertainties have continued to the slowing down of the “fifth-biggest economy” in the world. As the expectations of the Bank of England, the country may see the “weakest growth” this year “since the global financial crisis” and this could still be the same even if the Prime Mininster clinches a “Brexit transition deal”.
 
 
References:
reuters.com







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