Andrew Bailey, the Governor of the Bank of England, highlighted significant issues with UK labour data accuracy in a recent Mansion House speech.
- The Office for National Statistics (ONS) has been unable to obtain sufficient responses for its Labour Force Survey, affecting data reliability.
- This data shortfall has compelled the Bank to use alternative sources for critical monetary policy decisions.
- Bailey stressed the need for improved engagement with ONS surveys to gain better insight into workforce dynamics.
- The situation could impact the UK’s economic performance, especially with ongoing challenges like Brexit and energy price shocks.
In a significant address at Mansion House, Andrew Bailey, Governor of the Bank of England, expressed concerns over the accuracy of UK labour data. Speaking to a gathering of City financiers, Bailey explained how the Office for National Statistics (ONS) has struggled to collect adequate responses for its Labour Force Survey over the past 18 months. This issue has forced the Bank to rely on alternative data to make important monetary policy decisions.
Bailey remarked on the widespread acknowledgement of the Labour Force Survey’s challenges. He emphasised the substantial problem caused by a lack of clear insight into workforce participation, which is crucial not only for monetary policy but also for understanding the broader economic capacity of the UK. “Labour Force Survey challenges are widely recognised,” he stated, underscoring the urgency of the matter.
The governor noted that the Bank of England, alongside the Treasury and other stakeholders, continues to collaborate with the ONS to enhance the quality of UK labour data. While other advanced economies have seen a resurgence in labour market participation post-pandemic, the UK has experienced a decline, which Bailey warned could adversely affect economic performance.
The ONS has taken steps to mitigate this issue by increasing the number of survey participants from 44,000 in 2022 to 59,000 in the current year. Despite these efforts, users are cautioned against relying too heavily on short-term data from the Labour Force Survey when making decisions.
Bailey highlighted the importance of understanding labour supply dynamics in gauging the UK’s economic capacity. He pointed to additional pressures such as Brexit-related trade restrictions, energy price shocks, and stagnant investment as factors complicating the economic landscape.
At the same Mansion House event, Alastair King, the lord mayor of London, proposed changes to the UK’s Individual Savings Accounts (Isas) to promote investment in domestic assets. King suggested making full tax relief conditional on directing funds toward UK investments, which he believes could scale up British firms and increase returns for savers without requiring additional government funds.
The challenges in accurately capturing UK labour data pose a significant concern for economic policy and performance.
