## United Kingdom: Selected Issues

_IMF Staff Country Reports, February 13, 2018_

## Source details

**Canonical URL:** [United Kingdom: Selected Issues](https://www.imf.org/en/publications/cr/issues/2018/02/13/united-kingdom-selected-issues-45628)

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- [Markdown version](/en/publications/cr/issues/2018/02/13/united-kingdom-selected-issues-45628/index.md)
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## Bibliographic details
- Published: February 13, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484341759.002

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### Key findings
- Main factors behind the slowdown: weak productivity growth, labor market slack, and low inflation.
- Labor market disconnect: the unemployment rate has fallen to a 40-year low, yet wage growth continues to grow at a subdued pace.
- Broader measures of underemployment—accounting for involuntary part-time unemployment, inactive and self-employed people seeking regular jobs—suggest that slack in the labor market was higher than implied by the unemployment rate in recent years.
- Persistent weak productivity growth and well-anchored inflation expectations help explain the disconnect between low unemployment and subdued wage growth.
- Persistent tightness of the labor market should prompt some firming of wage growth in the coming year, everything else equal.
- A mild increase in unit labor costs would help bring domestically generated inflation in line with the inflation target.

### Labor market analysis
- Headline unemployment rate: fallen to a 40-year low.
- Wage dynamics: wage growth remains subdued despite low unemployment.
- Underemployment components considered: involuntary part-time unemployment; inactive people seeking work; self-employed people seeking regular jobs.
- Implication: effective labor market slack is greater than suggested by the headline unemployment rate, moderating wage pressure.

### Policy implications and outlook
- Expectation: some firming of wage growth in the coming year if labor market tightness persists.
- Policy signal: a mild increase in unit labor costs can support bringing domestically generated inflation back toward the inflation target.

### Publication metadata
- Pages: 45
- Series: Country Report No. 2018/043
- DOI: https://doi.org/10.5089/9781484341759.002

*United Kingdom: Selected Issues, IMF Staff Country Reports 2018, 043 (2018).*

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_Source: https://www.imf.org/en/publications/cr/issues/2018/02/13/united-kingdom-selected-issues-45628_