Member Article

Falling unemployment does not disguise issues for businesses

Business leaders in Coventry and Warwickshire say falling unemployment does not disguise issues firms across the region are facing as they look to grow.

The unemployment rate fell to 4.2 per cent in the latest figures from the Office for National Statistics while job vacancies rose to 1.22 million.

Sean Rose, policy officer at the Coventry and Warwickshire Chamber of Commerce, said: “The continuing drop in unemployment has been a real success story for the economy.

“Forecasts suggested the rate could double, particularly when the furlough scheme came to an end in October, but it is now edging back towards pre-pandemic levels.

“However, while it’s a relief that it hasn’t hit those heights, businesses across our patch are still facing a range of issues that are stifling growth.

“Obviously, there is concern around the rising levels of Coronavirus and the new guidance that was announced last week.

“There also big issues around recruitment and finding the right skills to help companies grow and, also, the rise in costs and supply chain problems.

“Businesses across the patch need a solution to those issues if they are to achieve their growth ambitions in 2022.”

British Chambers of Commerce Head of Economics, Suren Thiru, said: “Rising payroll employment and falling unemployment confirm that the UK jobs market has continued to rebound strongly despite a slowing recovery and the end of furlough.

“Record vacancies underscore the severe recruitment crunch facing businesses. Although the changes to Covid self-isolation rules are welcome, with coronavirus and Brexit driving a structural decline in available labour, staff shortages may persistently constrain economic activity.

“Although labour demand remains robust, Plan B may damage the jobs recovery by squeezing hiring intentions in those sectors most exposed to the new measures, including hospitality and retail, by diminishing their cashflow and dampening customer demand.

“While current labour market trends provide no barrier to raising interest rates, uncertainty over the economic impact of the Omicron variant means a December rate hike is unlikely. Interest rates may start rising from February 2022, but only if concerns over the new variant have faded.

“More support is urgently needed to aid those firms worst effected by Plan B, including returning VAT for hospitality and tourism back to its emergency rate of 5 per cent, reinstating full business rates relief for these firms and making additional grant funding available.”

This was posted in Bdaily's Members' News section by Matt Joyce .