Britain’s Jobs Statistics Crisis Gives Banks a Growing Headache
- The UK has struggled to collect accurate employment data
- Lenders use labor market numbers to estimate defaults on loans
An employee joins together lengths of timber at a factory in Foston near Derby, UK.
Photographer: Chris Ratcliffe/BloombergBritain’s banks may be putting extra money aside to cover bad loans due to confusion around the country’s faulty labor market data.
Lenders use the unemployment rate alongside other metrics including GDP, property prices, inflation and interest rates, to try to project how many people will default on their loans. However, the UK’s Office for National Statistics has been struggling to collect sufficient and accurate data on employment trends, leading to severe criticism from central bankers and politicians.
