Bank of England Gets a Breather… — but the Economy’s Still treading on Eggshells
Good vibes for Bank‑of‑England’s policy wizard, Rachel Reeves — the workforce is cooling off, and wages are slowing to a 5% climb, the lowest since June 2022. That’s a cleaner slope for the monkey that’s been juggling interest rates.
- Average earnings drop: 5% — lightening the inflation load.
- Expect rate cuts next MOP meeting on 7 Aug.
All sunshine, right? Nope!
Unemployment – The Dark Cloud
The UK’s job‑seeker numbers ticked up to 4.7% in the quarter ending May 2025. Highest rate since the pandemic, but not because robots took over—just because companies are now gripping their wallets tighter.
- Recruitment: slowed due to higher costs and weak growth forecasts.
- Job‑seeking: fewer moves, which feeds back into fewer vacancies.
- Business caution: costs, borrowing, global uncertainty spell “hold‑off.”
The Autumn Budget: A Game of Wait‑and‑See
Companies are pausing hiring while they await Chancellor Rachel Reeves’ fiscal playbook. With inflation at 3.6% (18‑month high) and her budget constraints, the pressure is on: support household & business vs. keeping fiscal credibility.
Unemployment could edge to 4.8% by year’s end. This nudges welfare spending higher— more people on the dole = heavier tax bills.
Skill Shortages: A Long‑Term Worry
Even with Skills England launching in July 2024, the mismatch of seekers and jobs persists. The UK labour market still feels the pinch of structural gaps that can’t be solved overnight.
Bottom line? The rates may drop, but the nation’s job market and welfare system are still a tightrope walk that demands careful balancing from the policy team.
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