Latest news with #LizMcKeown
The Independent
8 hours ago
- Business
- The Independent
Is Rachel Reeves a toxic influence in the workplace?
If you make hiring people more expensive, fewer people get hired. That might seem a bit like saying 'grass is green', but it appears someone forgot to tell the chancellor. We're now living with the results. The latest labour market update from the Office for National Statistics (ONS) shows job vacancies took a swan dive between March and May, declining by 63,000 to 736,000. The number of available openings has been in decline for quite some time, but that is a particularly big fall. It coincides with – and clearly shows the effect of – the chancellor's decision to increase employer national insurance contributions (NICs), which came into effect at the beginning of April. No wonder that 77 per cent of businesses with more than 10 employees told the ONS in late May 2025 that staffing costs – which includes wages, bonuses, national insurance and pension contributions – increased over the last three months. When the tax rise was announced, several big employers gave warning that the inevitable consequence would be fewer hires. Probably layoffs, too. "Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on," said Liz McKeown, director of economic statistics at the ONS. This used to be called 'natural wastage'. If, when, employers decide they need to cut their labour costs, it is much better to do so by not replacing people when they leave than it is by big, expensive and disruptive redundancy programmes. But make no mistake: they might still be coming. Reeves claimed when she raised employer NICs that this was not a tax on 'working people'. But, as I've said before, it is – and a particularly harsh one when one considers the impact on those who lose their jobs and then can't find new ones. When ministers tub-thump and tell people to 'get a job or else', those people might very well respond with: 'Hang on a minute, you lot have taken the jobs away.' Other numbers that underline the point. The revised estimate of the number of employees on payroll in April 2025 was down 55,000 on the month. The provisional estimate for May 2025 was down another 109,000. At 4.6 per cent, the official unemployment rate is now at its highest in nearly four years. In response, Capital Economics said the while UK jobs market while the jobs market is "clearly weakening' this is not 'a collapse'. Do you want to add the 'yet' or shall I? I get that Reeves was dealt a bad hand when she entered office. Public finances were in a mess (and still are); Britain was borrowing too much (and still is); and the public services were creaking (again, they still are). While that wasn't her fault, the method she chose to try and fix things was a bad one – as is being made increasingly clear. She could have shared the load, perhaps by raising personal NI alongside employer NICs, softening the blow by making it temporary. I know, I know, Labour promised not to raise taxes on working people – but, I repeat, a tax on jobs is a tax on working people so, really, what's the difference? With that ship having sailed, and the public finances still shaky, it looks like a raft of painful spending cuts are coming, along with still more unpopular tax rises. File under 'playing a bad hand badly.' If there is any consolation to be had from a thoroughly rotten set of numbers, it is this: wage rises, which have been running hot for quite some time, fell quite sharply, to 5.2 per cent from 5.6 per cent. Why is that good news? It's something that the Bank of England pays close attention to. Consider, too, that the ONS got its sums wrong when calculating the rate of inflation for April. It came up with 3.5 per cent in the most recent edition of the Consumer Prices Index (CPI) when the number should have been 3.4 per cent. That might not look like a big difference, but in economic terms, it matters – a lot (and also affects our bills). Put all this into the pot, and the gloom that had settled over interest rates has maybe lifted a little. As I've previously written, the rate setters on the Bank of England's Monetary Policy Committee (MPC) are having to grapple with too much dodgy data. Problems with the labour market survey were well known before the ONS had to admit that it mucked up the inflation rate (note that it isn't revising it). But even if some of the numbers are less reliable than we might hope, the economic mood music has clearly changed. And it isn't likely to improve much when Reeves unveils her spending review. If I'm right, and we do see more rate cuts as a result of all this, that would be a good thing. Because high rates are currently throttling the economy. Note that the biggest fall in vacancies affected the smallest business (those with less than ten employees). Those businesses are highly sensitive to interest rates. They've been crying out for cuts to ease the sky high cost of small business loans. If the MPC heeds its calls, it might be able to reconsider its hiring decisions.
Rhyl Journal
9 hours ago
- Business
- Rhyl Journal
Jobless rate surges to highest since 2021 while pay growth eases sharply
The Office for National Statistics (ONS) said average regular earnings, excluding bonuses, fell sharply to 5.2% in the three months to April, from a revised 5.5% in the previous three months and the lowest since the third quarter of last year. While this is still outstripping inflation, up by 2.1% with Consumer Prices Index inflation taken into account, it was lower than predicted, with most experts pencilling in a fall to 5.3%. The rate of unemployment also jumped to 4.6% in the three months to April, up from 4.5% in the three months to March and the highest level since the three months to July 2021, although the ONS continues caution over the reliability of the statistic. It coincided with firms facing a hike in national insurance contributions in April, which had been announced in October's budget, as well as a rise in the minimum wage. The figures also showed vacancies tumbled by 63,000 to 736,000 in the three months to May – the lowest since April 2021 – while payroll data revealed the biggest drop for five years last month, down 109,000 to 30.2 million. This followed a revised 55,000 drop in payrolled workers between March and April. Liz McKeown, ONS director of economic statistics, said: 'There continues to be weakening in the labour market, with the number of people on payroll falling notably. 'Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.' There are fears that the 'Awful April' rise in staff costs for firms will send unemployment levels soaring, with some firms already moving to cut jobs ahead of the tax increase. Paige Tao, economist at PwC UK, said: 'With rising national insurance costs, a higher minimum wage and escalating global tariffs all contributing to heightened cost pressures for employers, today's figures show that businesses are clearly feeling the squeeze.' The Institute of Directors raised concerns that 'the business case for hiring new staff has been dealt a series of blows' by rising staff costs and upcoming changes to employment law. Despite the fall in pay growth, economists said earnings so far remained robust – buoyed by the recent minimum wage rise. The Bank of England will be weighing this up carefully against clear signs of a weakening jobs market, according to economists. 'The labour market looks in worse shape in May, which could tip the Monetary Policy Committee (MPC) into cutting rates again in August,' said Rob Wood at Pantheon Macroeconomics. Matt Swannell, chief economic adviser to the EY Item Club, said he believed a cut in June remained unlikely, but that rates may come down again in August. 'Today's data is likely to reinforce the view that underlying inflationary pressures are cooling, but with pay growth still far above the rate consistent with inflation returning sustainably to 2%, most of the MPC will still want to act cautiously to guard against sticky inflation,' he said. Investec economist Philip Shaw said the cooling jobs market would likely 'reduce the MPC's concerns about the threat of 'inflation persistence''. He is pencilling in a cut to 4% in August and a further cut to 3.75% in November.
Yahoo
11 hours ago
- Business
- Yahoo
UK jobs data increase chances of more Bank of England interest rate cuts
The UK labour market continued to cool in April, with the latest ONS figures showing unemployment at 4.6% and a 0.2% drop in payrolled employees — or 55,000 fewer jobs — from the previous month. It marks the first time the unemployment rate has crept above pre-pandemic levels. The data helps pave the way for the Bank of England to make further interest rate cuts, according to some analysts. The downturn in the employment market and a deceleration in wage growth has the potential to take the heat out of inflation in the rest of the economy, making it easier for the central bank to maintain its trajectory of lowering borrowing costs. Annual wage growth excluding bonuses eased to 5.2% in the latest figures, marking the second consecutive monthly decline. The number of payrolled employees fell by 115,000 (0.4%) between April 2024 and April 2025, the data showed. 'There continues to be weakening in the labour market, with the number of people on payroll falling notably," said ONS director of economic statistics Liz McKeown. "Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on." The data comes ahead of a key moment for the government: chancellor Rachel Reeves will present her spending review to parliament on Wednesday. On Monday, it was revealed the review is set to contain changes to winter fuel allowance thresholds for pensioners. There has been some speculation it will also look to alter National Insurance thresholds, which were increased to help plug holes in the fiscal deficit. 'If there's any upside, it may be in the battle to control inflation," said Paige Tao, an economist at PwC UK. "This gradual cooling in pay growth may offer some reassurance to the Bank of England, following last month's inflation reading unexpectedly jumping to its highest level in over a year. However, with wage growth remaining high in absolute terms, the Bank may want to see this trend continue before proceeding with further rate cuts." Read more: What the winter fuel allowance U-turn means for your finances In May's meeting, the UK's central bank cut interest rates to 4.25% amid a global trade war and a weak domestic economy. That was its fourth reduction since rates peaked at 5.25% last year. At the time, BoE governor Andrew Bailey said policymakers needed to stick to a 'gradual and careful' approach to cutting interest rates. Bailey said: 'Inflationary pressures have continued to ease so we've been able to cut rates again today. The past few weeks have shown how unpredictable the global economy can be. 'That's why we need to stick to a gradual and careful approach to further rate cuts. Ensuring low and stable inflation is our top priority.'Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11 hours ago
- Business
- Yahoo
UK jobs data increase chances of more Bank of England interest rate cuts
The UK labour market continued to cool in April, with the latest ONS figures showing unemployment at 4.6% and a 0.2% drop in payrolled employees — or 55,000 fewer jobs — from the previous month. It marks the first time the unemployment rate has crept above pre-pandemic levels. The data helps pave the way for the Bank of England to make further interest rate cuts, according to some analysts. The downturn in the employment market and a deceleration in wage growth has the potential to take the heat out of inflation in the rest of the economy, making it easier for the central bank to maintain its trajectory of lowering borrowing costs. Annual wage growth excluding bonuses eased to 5.2% in the latest figures, marking the second consecutive monthly decline. The number of payrolled employees fell by 115,000 (0.4%) between April 2024 and April 2025, the data showed. 'There continues to be weakening in the labour market, with the number of people on payroll falling notably," said ONS director of economic statistics Liz McKeown. "Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on." The data comes ahead of a key moment for the government: chancellor Rachel Reeves will present her spending review to parliament on Wednesday. On Monday, it was revealed the review is set to contain changes to winter fuel allowance thresholds for pensioners. There has been some speculation it will also look to alter National Insurance thresholds, which were increased to help plug holes in the fiscal deficit. 'If there's any upside, it may be in the battle to control inflation," said Paige Tao, an economist at PwC UK. "This gradual cooling in pay growth may offer some reassurance to the Bank of England, following last month's inflation reading unexpectedly jumping to its highest level in over a year. However, with wage growth remaining high in absolute terms, the Bank may want to see this trend continue before proceeding with further rate cuts." Read more: What the winter fuel allowance U-turn means for your finances In May's meeting, the UK's central bank cut interest rates to 4.25% amid a global trade war and a weak domestic economy. That was its fourth reduction since rates peaked at 5.25% last year. At the time, BoE governor Andrew Bailey said policymakers needed to stick to a 'gradual and careful' approach to cutting interest rates. Bailey said: 'Inflationary pressures have continued to ease so we've been able to cut rates again today. The past few weeks have shown how unpredictable the global economy can be. 'That's why we need to stick to a gradual and careful approach to further rate cuts. Ensuring low and stable inflation is our top priority.'Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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First Post
11 hours ago
- Business
- First Post
UK unemployment rises to nearly three-year high at 4.6%, wage growth slows too
The rise in joblessness levels came as the UK's Labour government began implementing a business tax increase announced in its first budget last October read more Britain's unemployment rate rose to its highest level in nearly three years, official figures showed Tuesday (June 10), as businesses faced mounting pressure from higher taxes and new trade tariffs imposed by the United States. The Office for National Statistics said the jobless rate increased to 4.6 per cent in the three months to the end of April, up from 4.5 per cent in the first quarter. It marked the highest reading since July 2021. STORY CONTINUES BELOW THIS AD The rise came as the UK's Labour government began implementing a business tax increase announced in its first budget last October. At the same time, a 10 per cent baseline tariff imposed on British goods by US President Donald Trump took effect in April, hitting exporters and manufacturers. 'There continues to be weakening in the labour market, with the number of people on payroll falling notably,' said Liz McKeown, ONS director of economic statistics. 'Feedback from our vacancies survey suggests some firms may be holding back from recruiting new workers or replacing people when they move on.' Wage growth also showed signs of slowing, contributing to expectations that the Bank of England will continue cutting interest rates to support the economy. The central bank lowered its key interest rate by a quarter percentage point to 4.25% in May. Some analysts now expect further reductions into next year. 'With payrolls falling, the unemployment rate climbing and wage growth easing, today's labour market release leaves us more confident in our view that the Bank of England will cut interest rates further than investors expect, to 3.50 per cent next year,' said Ruth Gregory, deputy chief UK economist at Capital Economics. STORY CONTINUES BELOW THIS AD The pound edged lower on the news, while London's FTSE 100 stock index rose in early trading as markets priced in a more dovish outlook from the central bank. With inputs from AFP
