There was something the Bank of England Governor said towards the end of today’s Inflation Report press conference that rang a slightly jarring bell. Asked by the venerable Anthony Hilton of the Evening Standard about the alarming economic imbalances between different parts of the UK (booming London, economic weakness elsewhere), Mark Carney said the following:
As strong as the economy can appear in London and the Southeast, to some extent it appears stronger than it actually is: I’d remind you that unemployment is higher in London than it is in the national average, than it is in other regions.
He’s quite right. Unemployment is indeed higher in London than the national average. The thing is, it is always higher in London than elsewhere. This is a sign of dynamism as much as anything else. The capital sucks in millions of people looking for work. It has many competitive workplaces where people lose and gain jobs on a daily basis. Almost by definition, it always tends to have a higher churn of people looking for work.
As you can see from this chart, unemployment in London has not only been higher in London than the national average during the recession, it’s been higher every single month since 1992. If anything is remarkable about recent years it’s how much lower and closer it’s been to the national average than previously.
In other words, far from being evidence that undermines the argument that London’s economy has been strong recently, the unemployment stats actually bear it out.
I suspect this was an innocent mistake by the Governor. But a more jaundiced commentator might construe it as yet more evidence of the Bank being terrified about engaging with the idea that it might have some responsibility for the imbalances between various regions of the country. After all, he did finish off his response to Hilton with that old refrain: “We make policy for the country as a whole. We will not target policy to a specific region.”
See here for a response to that one.