Brexit threat yet to deter EU nationals from working in UK

The Brexit vote is yet to dissuade EU nationals from working in the UK, according to the latest labour market statistics from the Office for National Statistics

The number of EU workers in employment in the third quarter rose by 221,000 compared to a year earlier, the statistics agency found.

“That limited evidence suggests the referendum outcome and subsequent devaluation of sterling has had little impact so far on the number of EU workers in the UK labour force,” said David Freeman, a statistician with the ONS.

The data, published on Wednesday morning, were overall inconclusive on whether the EU referendum was affecting the labour market.

The rate of new job growth slowed in the three months following the vote but the unemployment rate fell to its lowest level in 11 years at 4.8 per cent in the third quarter, down from 5.3 per cent last year. The total number in employment rose to 31.8m, an increase of 49,000 compared with the previous three months.

“This is interesting because it is the first full quarter of post-referendum data and the headline is: nothing’s changed,” said Laura Gardiner, an analyst with the Resolution Foundation think-tank.

Part of the reason for the decrease in the unemployment rate in the past three months was a rise in the number of people categorised as “economically inactive”.

The claimant count — the number of people claiming unemployment benefit — rose in the third quarter by around 10,000.

Average weekly earnings increased by 2.3 per cent including bonuses and by 2.4 per cent excluding them, compared with the same period in 2015. However wages were at the same level as the three months before the EU referendum.

The rate of wage growth suggests “workers are in a weak position to offset what is likely to be a sizeable rise in inflation over the next year,” said Martin Beck, an economist with EY.

Economists are expecting an increase in consumer prices next year as the depreciation of the pound drives up import costs.

The 49,000 jobs created in the third quarter are less than the 172,000 in the previous three months but this could be because the economy is close to full employment rather than the effect of the referendum.

Mr Freeman of the ONS said: “Unemployment is at its lowest for more than 10 years, and the employment rate remains at a record high. Nonetheless, there are signs that the labour market might be cooling, with employment growth slowing.”

Labour productivity growth slowed in the third quarter, according to separate figures published by the ONS on Wednesday. The main measure of productivity — output per hour — grew by 0.2 per cent in the third quarter, slower than the 0.6 per cent in the previous quarter.

The slow rate of labour productivity growth since the 2008 financial crisis has been a persistent problem for the UK economy as it has contributed to wage growth and tax receipts falling behind economists’ forecasts.

“This is at the core of everything,” said Simon Kirby, an economist at the National Institute of Economic and Social Research. “Productivity is the key to our rising living standards,” he said.