UK labour market continues to adjust to the new normal

Views From the Marsh - David Owen

We will be writing a much more detailed UK piece later in the week after we have had time to digest Rachel Reeves’ three-year Public Spending Review, and the reactions of institutions such as the IFS, the Resolution Foundation and the NIESR (which all have their own different areas of expertise).

From long experience, it can be difficult to see the wood for the trees, arguably made worse with the release of far more information and misinformation around all such fiscal events (we do not include the OBR’s analysis in this bucket).

However, one thing is clear. In terms of the bigger picture, if the UK is ever to be successful in raising its trend rate of growth (arguably required to put the UK public finances on a much more long-term sustainable footing), it will need to raise its investment rate, at the margin substituting capital for labour - as John Van Reenen, the Chair of the Council of Rachel Reeves Economic Advisers, highlighted in a briefing to the Society of Professional Econom…