How should we regard the UK Claimant Count Figures due Weds 0930 GMT? There could be a temporary dip in the count, but will this actually mean unemployment has gone done, or more importantly that more people are economically active?
Guest post by Bob Nielsen
People are thrown off the count for transgressions of the complex and disincentivising rules. If they get some temporary or part-time work of 15 hours it will stop their benefits, but the Red Tape will stop them being counted for 3 weeks after they register. Longer term unemployed know that the loss of benefits makes part-time working in the UK uneconomic.
Many of the middle classes now out of work dont bother to register or are excluded due to their savings. The truth is the ‘claiment count’ is more a measure of the difficulty of being registered and tells us little about numbers in work. Likewise the official unemployment rate is about as accurate as the official inflation figures (massaged to look lower) and BoE growth forcasts (consistently exaggerated). We know for certain that over the coming year unemployment will rise in the UK as the budgeted cuts to the Government sector start to be actioned, and we know for certain that growth will be lower than predicted (baring a boost from a further major devaluation). So will the market continue to value GB£ on wishful thinking?
The vain hope that uncontrolled inflation will force an interest rate rise – that the very politicised BoE cannot give because it would inevitably produce lower growth and higher unemployment. The vain belief that the UK is immune from being sucked into the messy fallout of the snowballing Euro debt crisis – when the UK is bound up in European treaties and trading ties.
There may be short term bouts of irrational optimism in the currency as we have seen over the past week, but longer term the UK is not coming out of the woods, indeed it is more likely that it will re-enter recession during the next two years.
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