Bank deputy warns of ‘low-gear economy’ as young people bear the cost
Clare Lombardelli, the Bank of England’s deputy governor for monetary policy, says Britain is in “a low-gear economy” in which firms neither hire nor fire — and “what you see is the cost falling on young people, so you can see this rapid rise in the number of young people who are struggling to find jobs”. A second rate rise in December is “certainly plausible … It’s about 50/50”, she said, ahead of a speech in London on Tuesday.
“A labour market where you’re seeing a real fall-off in hiring. But actually, we’re not seeing much in the way of redundancies,” she said; employers “are delaying hiring” because “none of us thought we’d be nine months into this conflict”, and they now see “hiring a young person” as “a higher risk than it used to be”, especially in hospitality and retail. Unemployment is 4.7%, youth unemployment the highest outside the pandemic since 2015, and almost a million young people are neither working nor studying. The uncomfortable corollary for the Bank is that “you can have higher unemployment without it exerting a downward pressure on inflation … so that’s obviously a problem”. Ms Lombardelli voted with the majority to raise Bank Rate from 3.75% to 4% last Thursday and would not rule out December: “Equally, I don’t have enough information just yet.” Oil has since fallen below $100 and on Tuesday morning Brent traded near $91, which cuts the other way. Watch the speech text and next week’s labour-market data.