There is still a “significant risk” of a double-dip recession in the UK despite a fall in unemployment, a leading economist has told WNOL.
Vicky Redwood, UK economist at Capital Economics, spoke to WNOL after the Office for National Statistics (ONS) released the latest employment figures.
Despite the positive unemployment figures today, the Bank of England has warned that employment could continue to fall. Photograph: Den99
The number of unemployed people in the UK fell by 33,000 in the three months to January, according to the ONS.
The jobless rate now stands at 7.8%, or 2.45 million people.
The economy was also boosted by a 32,300 fall in the number of people claiming Jobseeker’s Allowance in February. The claimant count now stands at 1.59 million.
But long-term unemployment has risen and is at its highest since 1997. The number of people who have been out of work for more than a year has risen by 61,000 to 687,000.
‘Economically inactive’
Confusingly, as well as unemployment falling, the number of employed people has also fallen, to 72%.
This is because of a rise in the number of people classed as ‘economically inactive’. According to the ONS website, these are people who are “either not seeking work or are unavailable to start work”.
Redwood believes that ”the drop in the claimant count is a good sign for the economy” but that the falling employment figures are a cause for concern.
‘Fragile’
She said: “The rise in those classed as ‘economically inactive’ is not particularly helpful if it just reflects that people have completely given up on trying to find a job.”
She added: “This is certainly a sign that recovery for the UK economy is still pretty fragile.”
Redwood predicted that over the next few months employment will “continue to fall”, which could be a factor in the UK potentially suffering a double-dip recession.
“A double-dip recession is not the most likely outcome, but there is still a significant risk that the UK could experience this,” she said.
These comments follow warnings from the Bank of England, which earlier in the week stated in a report: “There remains a risk of further falls in employment if, for example, the recovery in demand proves more sluggish than businesses have expected.”
By Sophie Hudson