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MNI INTERVIEW: UK Labour Supply Hit Likely To Persist – IFS

(MNI) London

More UK workers are retiring early, complicating life for the BOE.

An exodus of older workers from the UK labour force is likely to persist, tightening supply side constraints for an economy already facing high inflation and complicating Bank of England monetary policy, associate director at the Institute for Fiscal Studies Jonathan Cribb told MNI.

The UK workforce has shrunk by 450,000 since 2019, the last year before the start of the Covid pandemic, a fall described by BOE Governor Andrew Bailey as very large by historical standards, and an study IFS of survey data found that much of this shift was driven by early retirement. Past evidence shows that those who retire are unlikely to return to work, a troubling finding for the Treasury which faces a permanent loss of tax revenue and for the Bank of England as it considers how to respond to a tight labour market and surging inflation.

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An exodus of older workers from the UK labour force is likely to persist, tightening supply side constraints for an economy already facing high inflation and complicating Bank of England monetary policy, associate director at the Institute for Fiscal Studies Jonathan Cribb told MNI.

The UK workforce has shrunk by 450,000 since 2019, the last year before the start of the Covid pandemic, a fall described by BOE Governor Andrew Bailey as very large by historical standards, and an study IFS of survey data found that much of this shift was driven by early retirement. Past evidence shows that those who retire are unlikely to return to work, a troubling finding for the Treasury which faces a permanent loss of tax revenue and for the Bank of England as it considers how to respond to a tight labour market and surging inflation.

Keep reading...Show less