Bloomberg's John Authers / ASR on implications of UK labour shortages

12th MAY 2022

John Authers notes, “There’s a good argument that Brexit directly stoked the inflationary pressure that is now afflicting the British economy. Ian Harnett points out  . . .

. . . that the Confederation of British Industry’s quarterly surveys of businesses about the impediments to their output work as a great leading indicator for inflation. 

When there is a rise in the proportion of companies saying they expect labour shortages to dampen their production over the following three months, then inflation rates tend to rise a year later; tight labour markets force companies to raise wages which they then pass on in the form of higher prices. Very ominously, the CBI now shows that labour shortages are the most serious since the stagflationary days of 1973.



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