LONDON (Reuters) – Britain’s statistics agency cautioned on Tuesday that the shift to its new, improved labour market survey could be delayed to as late as 2027, dealing a fresh blow to the Bank of England as it tries to assess inflation pressures in the economy.

The Office for National Statistics has struggled to reach respondents for its surveys since the COVID pandemic and is overhauling the way it measures the labour market.

The BoE relies on the ONS’ labour market data as part of its decision-making process on interest rates. BoE Governor Andrew Bailey said last week that the lack of a clear picture on employment was “a substantial problem”.

The central bank is closely monitoring Britain’s labour market as it considers how much inflationary pressure remains in the economy and when to cut interest rates again after reducing borrowing costs twice this year.

The ONS said there were “a number of potential scenarios” for when it could fully roll out its new Transformed Labour Force Survey, depending on the scale of design changes.

“Transitioning in mid-2025 is now unlikely, given current quality concerns,” it said in an update on the process.

“Aiming to complete this process in 2027 would allow us time to implement the shorter survey with further periods of parallel run” with the existing LFS, it said. “We are continuing to explore options to minimise the time frame to transition.”

An update on the timings would be announced in the spring of 2025, the ONS said.

The agency also said a problem with people leaving Britain’s labour market appeared slightly less acute than previously thought as it adjusted its calculations based on new population estimates.

The inactivity rate – which measures people not in work and who are not looking for it – was estimated at 22.1% in the April-to-June period, compared with a previous estimate of 22.2%, the ONS said.

However, Britain’s inactivity rate remains above the 20.8% level where it stood immediately before the pandemic, according to the ONS data, a contrast with other countries where it is now lower.

The ONS also published new estimates for Britain’s employment and unemployment rates.

The re-weighted employment rate was estimated at 74.6% in the new data, versus 74.5% previously, while the unemployment rate was unchanged at 4.2%.

Britain’s productivity problems appeared worse than previously estimated as the ONS revised down estimates of growth for output per hour worked to minus 0.9% from an initial reading of minus 0.3% for the three months to June compared with a year earlier.

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