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Broadbent: Headline Wage Numbers Could Be Distorted For Some Time

BOE

Q: The unemployment forecasts are looking pretty good. Can you tell us how much this is to do with the success of the furlough scheme or the limited impact from scarring. Will there be more inflation pressure from the labour market?

  • A (Bailey): The previous unemployment profile showed a spike in unemployment. There are a number of important drivers behind the improvement in the forecast profile.
  • A (Broadbent): The extension of the furlough scheme was the most important development since February. More of the people that were on furlough are able to go directly back to employment since the last projection. On the question of wages, we think there is spare capacity in the labour market. However, those wage numbers will be moved around by base effects and the employment recovery will be focused in the low wage jobs. So the headline numbers could be distorted for some time to come.

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