Though Britain's economy grew at a 4.4% rate in the second quarter, employment has been declining since mid-1993. Economist Leo Doyle of Kleinwort Benson Securities Ltd. explains the anomaly by pointing to a problem also plaguing U.S. labor statistics.
Doyle notes that while the official British Employment Dept. measure is weak, the rival Labour Force Survey shows employment gaining ground over the past year. Like the U.S. payroll and household surveys, the former counts jobs reported by employers while the latter is based on a survey of households. And as in the U.S., the employer-based survey can miss the boat when job creation by small new businesses is accelerating.
That, in fact, is exactly what Doyle thinks has happened over the past year or so. He cites a recent canvass by the British Chamber of Commerce that shows strong hiring activity among small companies with under 200 employees. If Doyle is right, recent tax and interest rate hikes are more likely to slow than to derail Britain's consumer recovery.