PM's targets will cost 60,000 jobs
Wed 21 May 2008
21/05/2008
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The prime minister's recently announced goal to reduce inflation to two per cent would cost the UK 60,000 jobs, a new study has calculated. By using the Treasury's model to forecast the economy, financial advisors, Ernst & Young's ITEM Club, has found the target would increase interest rates and raise unemployment. Peter Spencer, chief economic adviser, noted rising food prices had highlighted "a weakness in the UK’s inflation - targeting regime" and suggested the government could raise its inflation target for the next couple of years. He said there is a good case for the government to switch its inflation goal to one "which excludes the effect of food and energy prices". Currently, the UK economy is under pressure from a number of factors. Rising fuel, heating, food and consumer goods prices are all pushing up inflation. Despite this, employment levels remain high, although some employers are finding it difficult to recruit staff with the appropriate skills. Separate research by consultancy firm, Watson Wyatt, revealed the majority of employers (70 per cent) found it difficult to attract workers with the critical skills they need.
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