The labour market shows signs of slowing with vacancies and employment down as weak economic growth takes its toll, though the data need to be treated with caution. The UK is the only G7 country where employment is lower than pre-pandemic. With the OBR forecasting further increases in economic inactivity, the Government needs to revisit its approach given that only one in ten out-of-work disabled and older people currently get employment support. Nominal earnings grew at an annualised 3.5% over the last quarter, broadly consistent with the Bank of England’s inflation target and adding to the case that interest rates have peaked. The good news is real earnings continue to grow as inflation falls. But the bigger picture is people are earning £12,000 per year on average less than if pre-financial crisis trends had continued. That’s a nightmare we have to end.

It is concerning to see that the percentage of people aged between 18 and 24 who are not in employment or full-time education has risen over the past year. The number of people aged 25 or more who have been out of work for 12 months or more also increased in the period from November 2023 to January 2024 compared with the previous quarter. Both of these emerging trends have the potential to cause lasting damage to the labour market prospects of those affected. There is an urgent need to reverse rising levels of economic inactivity and long-term unemployment before they become entrenched.