The UK labour market isn’t working — and squeezing businesses won't either

With the spring forecast this week, the chancellor has an opportunity to pivot the narrative back to progress on growth and living standards.

- Louise Hellem

It's the right priority. There are tentative signs the economy is on a more stable footing. Inflation and interest rates are moving in the right direction. PwC's global investor survey shows the UK is seen as a safe harbour in a volatile world. But where the evidence tells a different story is on the labour market.

To improve living standards we must have a well-functioning labour market, but with unemployment rising to a five-year high, we're going in the wrong direction. The Bank of England this week highlighted how policy decisions are partly to blame.

The fiscal position is challenging. Business leaders understand this. But many feel that the default response has been to pull the lever marked “employers pay”. The reality is when costs are loaded onto employment, they ultimately harm the same hardworking people ministers want to support. For over a year we've cautioned unemployment would rise.