Some economists feared an ‘L’ or ‘U’ shaped recovery with long-term damage to the labor market, but these latest figures from the Office for National Statistics show a ‘V’ shaped rebound. Employment figures have risen by more than half a million in the past three months, recouping nearly four-fifths of last spring’s dizzying decline when the pandemic first hit.
“I know there could still be bumps in the road,” says Chancellor Rishi Sunak, “but the data is promising. There are now more employees on the payroll than at any time since March 2020 and the number of people on furlough is the lowest since the program started.
The 4.8% growth in the second quarter of this year is another sure sign of recovery.
Restaurants, pubs and cafes lead in demand for workers as the service sector opens up and consumers want to start spending again.
Restaurant dining has increased “to a level not seen since March 2020”, says Andrew Goodwin of Oxford Economics, with social activities related to food and drink recovering to 95% of pre-Covid spending. According to the Bank of England, credit card spending is only one per cent lower than it was before the pandemic. At least a quarter of the £200billion saved during the lockdown is expected to be spent over the next six months.
Although Covid-19 is still around, Britons are learning to live with the virus thanks to the success of the government’s vaccination campaign.
The rest of the world is less fortunate. A recent Covid upsurge in China has seen local lockdowns restrict international exports, meaning UK stores could well be empty of some goods just in time for Christmas. Along with bottlenecks in distant supply chains and global shortages of raw materials, our dependence on cheap foreign products may well be interrupted for months.
This could be an opportunity for UK manufacturers to fill these gaps and perhaps steer consumer tastes towards more homemade products permanently.
A shortage of qualified staff isn’t good news for restaurants, which have had to raise salaries to attract chefs and servers, potentially driving up menu prices. Students have been successful in filling some positions over the summer, but when they return to college there could be a recruitment crisis.
Italian food chain Prezzo sees around 15% vacancies and the chief executive of its parent company is worried about the longer-term outlook. “We need to ensure that skills training is central to a post-Covid recovery,” said Jonathan Goldstein.
It wouldn’t be a bad thing to see our young people moving into more productive careers.
Undoubtedly, some government measures in the event of a pandemic have aggravated staff shortages. The “pingdemic” and generous furlough packages have taken many skilled employees out of the workplace. A national shortage of delivery drivers has resulted in empty shelves in many supermarkets. The end of this overly cautious regime should lead to a return to work and a subsequent stabilization of wages.
The ultimate fear is that price increases will fuel a jump in inflation that could last for much of the current decade. Worryingly, the Bank of England doesn’t seem to be taking this concern more seriously by raising interest rates faster to blunt the surge. It would be terrible to think that the Bank of England and the government are nonchalant in the face of this threat because they actually want to see inflation come down in the face of the huge public debts accumulated by Boris Johnson.
The Covid-triggered price hikes may well be temporary, but experts warn the colossal cost of reaching zero carbon by mid-century could trigger another wave of more damaging inflation. Rising energy, food and transport costs are just some of the perils facing workers as the government pushes ahead with its green agenda.
A post-Covid boom is great news for all of us, exhausted by the relentless rigors of lockdown, but the government must not get used to scattering our money and must begin to exercise tighter control over a runaway economy.
This week’s figures show there is no need for reckless government financial stimulus and that Chancellor Rishi Sunak needs to impose more discipline on his spendthrift prime minister. Today’s good news can often turn into tomorrow’s nightmare.