‘Don’t strangle Britain’s economy’: Andrew Bailey warned over ‘cooling’ jobs market | UK | News newsbhunt


Bank of England Governor Andrew Bailey has been urged not to “strangle” the economy with more interest rate rises amid signs of a cooling UK jobs market.

The unemployment rate for those aged 16 and over was 4.2 percent in the three months to August, the same as in the previous three months, according to estimates from the Office for National Statistics (ONS) published on Tuesday (October 24).

Vacancies also dropped for the 15th time in a row – down 43,000 quarter on quarter to 988,000 in the three months to September – in a further sign Britain’s jobs market is cooling in the face of a barrage of interest rate hikes and economic worries.

Asked what the latest unemployment rate should signal to the Bank of England’s interest rate setters, Graham Cox, Director at Self-Employed Mortgage Hub, said Threadneedle Street needs to hold its nerve and leave base rate unchanged.

He added: “Another rise now would further reduce already fragile business confidence, deter investment and make a bad situation even worse. However, I fear having been late to the party in raising rates, Andrew Bailey may go too far and strangle the economy unnecessarily.”

Base rate is currently 5.25 percent with the Bank’s monetary policy committee due to announce its next move on November 2. Some analysts have long argued the BoE wants to tip the UK into recession to bring inflation down, with households and businesses suffering the consequences.

Stephen Perkins, managing director at Yellow Brick Mortgages, said with “stagnant” inflation and unemployment, coupled with wage increases, will lead the BoE to feel another increase of 0.25 percent is needed to re-start downward momentum on price rises.

He added: “This, however, would be idiotic as the effects of many of the previous rate increases are still yet to be fully felt.

“So many businesses are on their knees asking for mercy and reprieve and the housing market is in a Bank of England-induced coma awaiting a needed adrenaline shot and there is the Middle-East conflict and oil prices also impacting the economy.”

Mr Perkins urged the Bank of England to hold base rate and allow previous rises to make their impacts “without landing another hammer blow” and forcing the UK into a deep recession.

He concluded: “But anyone betting on mercy or logic from the Bank of England is not getting good odds based on recent form. Sadly, the UK economy is all-in and the wheel is spinning.”

On the jobless figures, Sarah Coles, head of personal finance at Hargreaves Lansdown said: “This isn’t the agony of a collapsing jobs market: it’s the chronic malaise of an economy growing gradually weaker.

“With employment falling slightly, unemployment rising, economic inactivity up and vacancies dropping again, optimism is ebbing slowly away. We need to prepare for more difficult times ahead.”

The ONS data also showed 119,000 working days were lost to industrial disputes in August with the majority of strikes in the health and social work sector.

Junior doctors and hospital consultants have staged a series of strikes in a long-running dispute over pay and conditions in the English NHS.

Earlier figures from the ONS showed regular earnings rose by a near record 7.8 percent in the three months to August and were 0.7 percent higher with Consumer Prices Index (CPI) inflation taken into account.

Revised figures also revealed wages have been out-pacing inflation since the three months to July, meaning wages are rising faster than prices for the first time since October 2021.

However, earnings growth eased back from 7.9 percent in the three months to July in a sign firms are starting to hold back on wage hikes.

Michael Stull, Director at ManpowerGroup UK, said: “The key question for employers at the moment is where they draw the line to ensure the economy doesn’t get caught up in a wage increase and inflation spiral. We’ve seen exceptionally high growth rates in regular pay along with today’s news that the real living wage is to rise to £12 an hour.

“Wages are stickier than other prices overall so it’s going to take at least a couple of months to work through the numbers, as we will hopefully see the inflation rate decline in-line with Government and Bank of England targets to halve the numbers by the end of the year. After that, employers should begin to follow suit but until then it’s a case of holding tight.

“To avoid a wage battle, employers should look internally at what they can offer in terms of retention and upskilling their existing workforce – targeting lowering attrition numbers than growing headcounts will increase productivity.”

Work and Pensions Secretary Mel Stride MP said: “There are more than one million more people on company payrolls compared to 2019, a near record high, and today’s statistics also show inactivity has fallen by over a quarter of a million since the pandemic peak.

“Growing the economy is our priority. That’s why we are bearing down on inflation and bringing in the next generation of welfare reforms to drive down inactivity and help more people into work.”


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