Average earnings growth in the UK has decreased to 5%, the lowest level since June 2022, indicating cooling inflationary pressure. The Monetary Policy Committee may vote to cut interest rates on August 7th. However, the unemployment rate has risen to 4.7%, the highest since the pandemic. A slowdown in recruitment activity is evident as businesses are cautious due to increased costs and weak economic growth forecasts. Job vacancies are decreasing and employers are now more risk-averse, signaling potential further increases in unemployment by the end of the year.
The modest rise in unemployment reflects a slowdown in recruitment activity, with businesses cautious about hiring due to increased business costs, weak economic growth forecasts, elevated borrowing costs, and ongoing uncertainty in global markets.
Over the long-term, we are seeing a gradual softening of the labour market, with job vacancies continuing to decrease and now consistently below pre-pandemic levels.
Chancellor Rachel Reeves faces growing pressure to respond. With inflation at 3.6% reaching its highest level in 18 months and her fiscal headroom limited by self-imposed rules, the Chancellor must balance calls for greater support to households and businesses with the need to maintain fiscal credibility.
Collection
[
|
...
]