This could be the week unemployment rises – but it’s nothing to do with Brexit

The Brexit debate will continue to dominate the news agenda and any stories that appear to support one side or the other will be twisted to do so. That will apply to the first two bits of economic news worth looking out for this week. The most important will be the jobs and unemployment figures on Wednesday; the other is the inflation figures on Tuesday.

It is possible that headline unemployment will go up from its present 5.1 per cent, for the job market has become much softer in recent months. Employment, in many ways is a good measure of what is going on in the economy and that has been only creeping up in recent months. It is a far cry from the half million and more jobs that were being created annually a couple of years ago.

If employment has gone into reverse and/or if unemployment has risen, that will be spun into the dire impact of Brexit. Note how the cautious comments over the weekend by Mark Carney, Governor of the Bank of England, have been spun in that way. Actually, the change in the mood of the labour market probably has more to do with a general slowdown in the economy, and perhaps also the impact of the living wage. But that is not how the news will be presented.

Expect a similar response to the inflation figures on Tuesday. They will probably be quite muted but if inflation is starting to nudge up, that will be attributed to higher import prices, including fuel, and that in turn can be attributed in part to the weaker pound. It will be another “Brexit fears hit the price of petrol” type story.

What happens to sterling in the coming weeks will matter politically because Britons don’t like a weak currency, particularly as we head into the holiday season. The idea that leaving the EU will lead to currency collapse is a potent one, but there are other pressures on the pound that don't have a lot to do with EU membership. Insofar as Europe is an issue, it is because of weak demand from the continent for our exports, and that in turn has been a result of slow growth there for the past few years.

Story number three that will affect us will be US interest rates, because the faster they go up there the faster they are likely to rise here. On Tuesday, the US also gets inflation figures and core inflation there does seem to be climbing solidly. Maybe that will trigger two more rises in rates this year, not one. There is a huge debate about the policy of the Federal Reserve, with many people worrying that it is moving too slowly in raising rates – the danger then being that it will have to push much harder next year. But ultimately, US rates will be determined by US inflation. The faster it recovers the faster the Federal Reserve will have to move. That is why the figures matter.

The next thing to look out for will be the oil price. There is no particular policy statement scheduled to be made by any of the big producers, but the markets have been chewing over projected supply and demand in the months ahead and are concluding that the chronic over-supply period may be ending. Next year the supply/demand equation looks like flipping to excess demand. The oil market has been all over the place in recent months so don’t attribute too much to what it does in the next week or two. But oil is so important at a time like this, it is well worth watching.

Finally, not so much what will come up this week as what occurred last week. On 10 May, something happened in Britain that had not happened since 1882. For a few hours that day, no coal was used to generate electricity. I had not spotted this until the newsletter Exponential View and the research company Aurora Energy ferreted it out.

The astounding thing is that five years ago coal was producing more than half British energy. Most of our power now comes from gas but with a base load from nuclear and wind and hydro.

When you think back to the role of coal both in the British economy and in our folklore, it is a huge change in such a short time. More than this, it brings home how why the ways the UK earns its living in the world will be very different in the future from the ways it did in the past.