There are more people looking for fewer jobs in Britain today than there were a year ago.
That is the bleak record that the chancellor will have to defend as she prepares for her budget in two weeks’ time.
The Treasury has not yet responded to the latest labour market figures, which contain very few silver linings.
The unemployment rate hit 5%, rising faster than economists were expecting. Vacancies have fallen over the past year and, while economic inactivity has fallen over the past year, it remains high by historic standards.
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When things take a wrong turn in the economy, governments are first in line for the blame- sometimes unfairly. In this case, however, the role of government policy is clear.
Within a few months of coming to power, Rachel Reeves launched a big tax raid on businesses to support the public finances. The centrepiece was a £25bn increase in employers’ national insurance contribution increases and an increase in the national living wage.
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At the time employers in some of the most exposed sectors, like retail and hospitality, warned that they would have to pass on costs to consumers and cut the size of their workforce, placing upwards pressure on inflation and unemployment
Sainsburys and M&S said prices would rise, while business surveys repeatedly pointed to a slowdown in hiring.
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The Treasury was prepared to call their bluff. Some in the department thought that businesses would absorb the costs, eating into their profits before passing on costs in competitive, price sensitive sectors like retail and hospitality.
That hasn’t been borne out by the data. Not only has food price inflation increased but the jobs market has also suffered.
Andrew Bailey, the governor of the Bank of England, last week said it was the jobs market where the main consequences were being felt.
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Employers are not hiring new workers and they are not replacing those that have left.
Payroll data, collated by HMRC, shows 180,000 jobs disappeared from company payrolls over the past year and 40% of them were in the retail and wholesale sectors.
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The people doing those jobs won’t be paying income tax or national insurance. A weakened tax base makes the job even more difficult for a chancellor who is looking for new ways to raise money.
Then there are the 9.1 million people who are not even looking for work, many of them drawing on out of work benefits.
The chancellor has repeatedly told us that growth is the only way out of an endless cycle of tax rise or tax cuts but there is no point in talking about economic growth while jobs creation goes backwards.
With more tax rises on the horizon, the challenge will be in calibrating policy so that tax rises don’t harm the growth agenda. She will have to do better this time round.
