At least things are not getting worse!
Earlier this week, in an interview with the Times, the Bank of England governor Andrew Bailey indicated there could be larger cuts to interest rates if the jobs market showed signs of slowing down.
However, the UK jobs market has continued to weaken while the annual rate of pay growth in the three months between March and May slowed to 5%, according to the Office for National Statistics (ONS).
Many analysts have said that April’s rise in employer National Insurance contributions (NICs) has discouraged firms from hiring.
While the unemployment rate has risen, the ONS has said the figure needs to be treated with caution due to problems with how the data is collected.
Paul Dales, chief economist at Capital Economics, noted that ONS data shows the number of people on PAYE payroll has fallen in seven of the eight months since Chancellor Rachel Reeves announced the NICs rise.
Mr Dales said this trend “clearly shows businesses are offsetting the rises in their costs by reducing headcounts”.
Higher prices for food and clothing, air and rail fares – and a lower drop in fuel prices than this time last year – contributed to higher inflation, official figures show.
The rate at which prices increase matters to shoppers, whose money doesn’t go as far if goods and services are becoming rapidly more expensive.
Inflation remains much higher than the Bank of England’s target rate of 2%, but a cut in the cost of borrowing is still expected at next month’s rate-setting meeting.
Chancellor Rachel Reeves said she knew people were “still struggling with the cost of living” but said the government’s plans included putting “more money into people’s pockets”.
In her annual Mansion House speech on Tuesday, the chancellor emphasised the importance of growth to putting the UK back on track.
She said the financial industry it must change the “negative” narrative around savers putting money in stocks and shares.
For businesses this all means continuing to keep a close eye on cash flow and taking no unnecessary risks.
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