The Bank of England’s ability to make crucial interest rate decisions is being severely hampered by unreliable labour market statistics, according to Governor Andrew Bailey. Speaking at London’s Mansion House, Bailey highlighted this mounting concern in his most direct critique of the current data collection challenges.
The Office for National Statistics (ONS) has been struggling for 18 months to gather sufficient responses for its monthly Labour Force Survey, forcing the central bank to seek alternative measures for its policy decisions. Bailey emphasised the gravity of the situation, stating it presents “a substantial problem” when policymakers cannot accurately gauge workforce participation levels.
British citizens’ reluctance to participate in ONS surveys has become particularly problematic, with Bailey expressing difficulty in explaining to fellow governors why Britons are notably unresponsive to data collection efforts. The issue has prompted ongoing discussions between the Bank, Treasury, and ONS to enhance the quality of UK labour market statistics.
The data crisis comes at a critical time as Britain grapples with post-pandemic labour force participation rates that lag behind other advanced economies. Recent ONS figures indicate an inactivity rate of 21.8 per cent, showing a modest 0.4 percentage point decrease over the quarter to October, though these figures carry significant uncertainty.
The Governor’s concerns extend beyond immediate policy implications, touching on broader economic challenges including Brexit-related trade restrictions, energy price volatility, and declining investment. Bailey also used the platform to address the incoming US administration, calling for the preservation of open trade policies amidst potential new tariff considerations.
The ONS has attempted to address these challenges by expanding its survey sample size from 44,000 to 59,000 respondents year-on-year, while cautioning users to consider multiple data sources when interpreting labour market trends. This statistical uncertainty continues to cast a shadow over the UK’s economic policy-making capabilities.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.