The UK appears to be booming. You can see it in the official data, but it’s just as obvious in the anecdotal that there don’t appear to be enough staff to keep up with demand. This week alone The Observer wrote on a restaurant in St Albans short of 20 of its normal number of employees (55); The Sunday Times featured a brave entrepreneur setting up a new chain (Tapas Revolution) and struggling to find the 25 chefs and waiting staff he needs; The Times said that in Devon “millionaire hotelier” Giles Fuchs is washing his own dishes; and The Daily Telegraph noted that Le Gavroche in Mayfair is to suspend lunch service due to staff shortages. The Sunday Times sent two young people on a quest to see how many firm job offers they could get in 24 hours. One got nine; the other six. Not bad.
Overall, says trade body UKHospitality, there is a shortfall of 188,000 hospitality workers in the UK. Some of this is due to many workers still being tied up in furlough (well over two million). Some may also reflect changing attitudes to work – 810,000 new firms were started in the UK in the year to end-March (up 22% on the year before). Founders aren’t usually also employees. Still, even if it turns out to be temporary (some furlough will turn into redundancy and around 60% of new businesses fail in year one), it’s little wonder wage pressures are rising: employers are offering sign-on bonuses, extra cash for bringing in a mate and, in one case, monthly hampers for those that stay, plus the promise of future vineyard visits.
This is what employers tend to do before they do the one thing they really hate (it’s hard to roll back) but that actually works – put up wages. You might at this point recall the pre-Brexit era when we were told that the opposite was not true – that the surge in the UK labour supply after we introduced full freedom of movement in 2004 was not holding wages down. Definitely not. But we’ll gloss over that for now.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We’re still going to need oil
Back to the V-shaped recovery: our services sector (which makes up 80% of the UK economy) grew at its fastest pace for 25 years in May. Construction and manufacturing are booming too – most forecasts now have GDP rising at 7%-plus this year. If your brain isn’t flashing inflation warnings yet (it should be), consider how much energy growth takes, and where that energy might come from. There’s a reason metals prices are rising (renewable-energy creation is very metals-heavy). And there’s a reason oil prices are rising – we use a lot of it and will do for a long time yet. One of the best stories of our age is the spat between outdoor wear group The North Face and oil-services company Innovex. The latter ordered 400 jackets from the former for its staff. North Face rejected the order – Innovex wanted to put its logo on the jackets; North Face did not want to be associated with them. The Innovex CEO took his revenge by noting that not only are most North Face products made at least in part from hydrocarbons, but that without oil and gas there would, for now at least, be no skiing, kayaking or mountain climbing.
A reminder that despite all the environmental grandstanding, we still need fossil fuels – and that we’d be wise to recognise that in our portfolios. If inflation is coming you may get a hamper and a raise. But we think you’ll want to hold commodities too.
-
Do you qualify for the Winter Fuel Payment if you live abroad?The Winter Fuel Payment will be means tested for expats living in Europe, in line with the new rules impacting those in the UK. But a quirk in the system means not all countries are eligible.
-
What the Employment Rights Bill means for your jobNew workplace reforms are set to give employees new rights to benefits and flexible working
-
How much does the prime minister get paid?How much does the prime minister get paid and should he get more?
-
Why Labour sleaze mattersLabour has come under the spotlight for accepting over £800,000 in gifts. Is this just crony politics as usual?
-
How to improve economic output using the supply-side approachBoosting potential economic output through public investment is crucial, says David C. Stevenson
-
Anders Holch Povlsen: the Danish tycoon reshaping BritainAnders Holch Povlsen has snapped up land in the Highlands, returning it to a wilderness, and plans to transform a historic department store in Edinburgh. Can he also revive Topshop?
-
What can small businesses expect from Labour's employment law reforms?Small businesses could be impacted by Labour’s reforms to employment law which will be unveiled next month – here's how to prepare.
-
Will Topshop return to the UK high street?Despite Asos selling a £135 million stake in Topshop, is there a chance for the retailer to make a comeback on the high street?
-
Mexico passes controversial judicial reform – will it hurt investors?What will Mexico's new reform mean for investors and the country's economy?
-
London Stock Exchange exodus: which companies could be next to go?As many companies exit London, the steady trickle of stocks listing elsewhere could turn into a stampede. Who will be next, and what does this mean for investors?
