Based on reporting by The Guardian

Bank of England deputy governor Clare Lombardelli said in a Guardian interview published Nov. 10 that young people in Britain are absorbing the cost of weaker hiring as firms hold back amid fallout from the war in the Middle East¹.

Lombardelli, the Bank's deputy governor for monetary policy, described what she called a low-gear economy: a labor market with a sharp drop in hiring but little increase in redundancies, a low-hire, low-fire pattern, according to The Guardian¹. She said employers are delaying recruitment while they wait to see whether geopolitical uncertainty eases, and that people new to the labor market are hurt when firms are not hiring¹.

The Guardian said she linked the conflict's energy-price surge and clouded outlook to rising youth unemployment, and that she is expected to outline concerns about slower labor-market dynamism in a London speech on Tuesday¹. The newspaper said tackling youth joblessness is a growing government priority after the number of 16- to 24-year-olds not in education, employment or training approached 1 million¹.

Lombardelli said the hiring shortfall is especially visible in hospitality and retail, sectors that often provide first jobs, The Guardian reported¹. Employers surveyed by the Bank, she said, described hiring a young person as a higher risk than it used to be¹.

She voted with the majority of the Monetary Policy Committee to raise Bank Rate from 3.75% to 4% last week, The Guardian said, and described a further quarter-point rise as plausible as early as December, with market pricing about even¹.

Higher unemployment would not necessarily reduce inflationary pressure, she said, because firms holding onto staff are hiring mainly for harder-to-fill roles, according to the same interview¹.