Europe’s labour shortages – not all equal
Although reported labour shortages in the eurozone appear to be worsening, our analysis of the underlying dynamics shows a more nuanced picture. We think the shortages in manufacturing and services are more cyclical in nature and should ease faster, while those in construction appear more structural.
What you will learn:
- Severe labour shortages in manufacturing and services are occurring amid a strong cyclical rebound in demand, which we expect to revert to trend in line with forward-looking indicators.
- This is not the case for construction, where we expect demand to remain elevated.
- Both the manufacturing and services sectors can draw on untapped labour resources, as employment in each is still around 2% below pre-pandemic levels.
- Employment and vacancies in construction have already surpassed their previous peaks and scope for productivity gains is limited.
Big shifts are underway in Russia-China trade
Data for Q3 on the volume of China's imports of crude from Russia show a drop against the June level. Rather than an indication that China's demand has peaked, this may be a sign that China is preparing for the Russian oil price cap recently agreed by G7 by shifting some of its purchases to the grey market.Find Out More
Levelling up is unlikely under the Liz Truss government
The government's levelling up ambition has probably been made more, not less, difficult by the new "Plan for Growth". Policies of lower taxes, less regulation, and a smaller state are unlikely to have much beneficial impact on long-term growth at the national level, let alone in those regions with long track records of underperformance.Find Out More