U.K. Labor Market Shows Signs of Life After Johnson Election Win
The U.K. labor market received an election boost in December, with the number of people placed in permanent jobs rising for the first time in a year and business optimism surging.
A survey for KPMG and the Recruitment and Employment Confederation found companies more willing to take on workers after Boris Johnson’s Conservative Party won a commanding parliamentary majority last month.
“After the uncertainty of 2019, there are some signs of a clearer outlook for hiring,” said REC Chief Executive Neil Carberry. “With a new government in place and the path ahead looking more predictable, some businesses have decided that they have waited long enough.”
Late last year, some Bank of England policy makers cited signs of weakness in the labor market as a reason to cut interest rates, and Governor Mark Carney this week noted the rising level of spare capacity in the economy. BOE official Silvana Tenreyro will speak on the labor market later on Friday, which may add more to the debate.
The more positive mood in the REC report was highlighted in a separate survey which found optimism among U.K. firms climbed to a record high following the general election.
Business sentiment jumped while risk appetite and the outlook for hiring and spending reached the highest level in over four years, according to a poll of chief financial officers by Deloitte. Brexit, the biggest worry since the 2016 referendum, sank to third place behind concerns over weak demand and geopolitical risk.
The KPMG/REC survey cautioned, however, that the improvement in labor market conditions was subdued and nervousness is expected to persist.
Britain is due to leave the European Union on Jan. 31, and many doubt Johnson can deliver on his pledge to tie up a free-trade deal with the bloc during the subsequent 11-month transition period. If he fails, Britain will once again be facing a disruptive cliff-edge Brexit at the end of the year.
Vacancies edged higher last month, with recruiters reporting demand for blue collar workers and engineers, the REC survey of around 400 firms found. Starting salaries also picked up. However, the number of candidates continued to decline sharply as those in secure jobs chose not to take a risk on new employment.
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