It’s good news that unemployment has fallen again to its lowest rate in over a decade. The number of people in work is now at a record high of 31.7 million.
The proportion of 16-24 year olds who’ve left full-time education and are unemployed is at its lowest ever. And wages increased by 2.2 per cent in the last year.
The number of unemployed claimants in my Arundel & South Downs constituency last month was just 324. This represents a rate of 0.7 per cent of the economically active population aged 16 to 64, one of the lowest claimant rates in the country.
The challenge, following the referendum, will be to maintain this performance. This week the International Monetary Fund cut its growth forecast for the UK next year.
It warned that the decision to leave the EU had damaged the British economy’s short-term prospects and “thrown a spanner in the works” of the global recovery.
I was also concerned to read a report produced last week by our Local Enterprise Partnership, Coast to Capital, which surveyed local business opinion after the referendum.
It found that many local firms were making active contingency plans to prepare for a slowdown. One major regional construction firm has paused multi-million pound deals, while others are putting deals on ice until trading conditions become clearer.
Some firms are cancelling pay rises, protecting cash, and preparing options for large-scale redundancy and cost cutting. One small local IT consultancy has seen two potential projects worth upwards of £250,000 put on hold and another customer has indicated that they will not be progressing after a pilot stage (due to uncertainty with their customers).
Another company, a fast-growing export business, reported that it had an order with a German company which has now been cancelled.
It seems likely that the new Government will have to deal with a deteriorating fiscal position, and the aim to eliminate the Budget deficit by the end of the Parliament has been abandoned, signalling higher borrowing.
Some of this business reaction has to do with confidence, and the rapid appointment of a new Prime Minister will help to rebuild this.
But uncertainty abut the UK’s future trading arrangements with the EU, its biggest export market, will be with us for some time. The new Government faces very big challenges ahead.