It’s been over a year since Brexit and despite predictions that UK will face harsh economic crisis due to the event, such prediction didn’t get come into play as off yet. However, the effect of Brexit was real and according to several economist from EY Item Club, the unemployment rate in the UK might rise in the coming months.
According to their prediction, the unemployment rate in the UK might rise from 4.8 percent to 5.4 percent.
This might come as a surprise as in recent months, reports have suggested that UK economy was holding up better than expected since last summer despite slowdown. Although during this time there were signs of economic struggles, the continuous slowdown in the consumer sector means that the unemployment rate of the country will rise over next two years.
Talking about the upcoming employment crisis, EY Item Club said, “The UK labor market is set to face a rockier period over the next few years with unemployment rising as the consequences of a slowdown in economic growth bite and pay growth remaining subdued.”
In addition to this, workers are likely to see a stable wage growth of 2.75 percent throughout next three years. Talking about the crisis, one senior economic adviser at the EY Item club said, “The UK labor market may be starting to become a victim of its own success.
“As the proportion of people in work has climbed ever higher, firms may have found it more difficult to fill vacancies, resulting in greater utilization of the existing workforce and slower jobs growth.”
“Rising employment and falling unemployment have yielded a record low jobless rate, but this has yet to translate into any meaningful boost to pay growth.”
“In explaining this, a shift towards less secure and, on average, less well-paid, part-time and self-employed jobs may have dampened workers’ willingness to push for higher wage demands.”
Despite the fact that UK unemployment rate was record low last month since April, this means that the consumers in the coming months will face hard time as inflation rate is likely to gain pace.
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