Key facts
- Lombardelli said employers are delaying hiring rather than cutting staff, a pattern she called a low-gear economy.
- She said youth unemployment has risen at a sharper rate than overall unemployment, to its highest outside the Covid pandemic since 2015.
- Lombardelli said a December quarter-point rise is plausible and she would not rule it out, but she lacks enough information.
- She said higher unemployment would not necessarily lower inflation because firms are hiring only for hard-to-fill roles.
- Lombardelli is expected to outline concerns over slowing labor market dynamism in a London speech on Tuesday.
Clare Lombardelli, the Bank of England's deputy governor for monetary policy, said young people in Britain are bearing the cost of what she called a low-gear economy, in an interview with the Guardian published on November 10, 2026. She said employers are holding on to staff and freezing recruitment as they wait for the conflict in Iran to resolve, hurting those new to the labor market.
"What you see is the cost falling on young people, so you can see this rapid rise in the number of young people who are struggling to find jobs," Lombardelli said. She said the pattern is most visible in sectors that offer first jobs, such as hospitality and retail, and that employers surveyed by the Bank said hiring a young person is a higher risk than it used to be.
Her comments follow the Bank's decision last week to lift its base rate from 3.75% to 4%, its first increase in three years. Lombardelli said a further quarter-point rise could be warranted from as early as the December policy meeting. "Every meeting is live for us. December is, you know, it's certainly plausible," she said, adding that market pricing is about 50/50 for December and that she would not rule it out but does not have enough information yet.
UK unemployment has risen to 4.7% this year, the report said, while youth unemployment has risen faster to its highest levels outside the Covid pandemic since 2015. The number of young people not in education, employment or training has risen to almost a million. Lombardelli is expected to outline concerns over a slowdown in labor market dynamism at a speech in London on Tuesday.
The report said oil prices have fallen below $100 a barrel after Democratic victories in the US Congress, which some investors interpreted as potentially constraining Donald Trump's capacity to prolong the conflict in Iran. Trump said at the weekend he was highly unlikely to order fresh attacks on Iran as long as talks to end the conflict progressed. Lombardelli said higher unemployment would not necessarily bear down on inflation because employers are hiring only for positions they find harder to fill.