England starts again from the South

Unemployment rate in Great Britain has registered a considerable, and unexpected, decrease in the first few months of 2011. According to the Office for National Statistics, the total number of unemployed people has reduced by 17,000 falling to 2.48 million. It is enough to hope that, despite the drastic measures adopted by the Tory government for the reduction of public debt, English economy found inside itself the strength to start again. What the government and the public sector take away, the private sector gives. Indeed, as last March data report, citizens who are employed are 29.23 million, 143,000 more compared to September 2010. Another significant aspect is the high drop in applications for unemployment benefits. In addition, the inflation rate decreased by almost 1 percentage point, switching from 4.4% to 4%.

It must be also noted a considerable drop in unemployment among the youngest (16-24 years old), swinging from 974,000 in February to 963.000 in March. Yet, the geographical distribution of data shows significant differences between the North-East, where the highest rate of unemployed people reached 10.4%, followed by West Midlands with 9.7%, and the London Region and the South-East where the percentage falls to 5.9%. The Office for Budget Responsibility estimates that unemployment will reach a peak of 8.2% in the second quarter and will fall again in the next months.

On the one hand, these data confirm that the British labour market is characterized by a strong outbound and inbound mobility; on the other hand they show that, thanks to this flexibility, the North-East industrial sectors grow less than the service sector, which is mainly developed in the South-East.

According to many Neo-Keynesian economists, the anti-deficit policies implemented by Cameron’s government should have weakened an already reluctant economic growth. Contrary to this, however, the positive trend reveals the invisible hand of the private sector is able to redistribute workers from less and less competitive sectors (the industrial sector of the North and Centre) to those where the British comparative advantage is higher (that of the tertiary sector of the South-East).