LONDON (AFP) – Britain’s wage growth reached the lowest level in two years, official data showed yesterday, but analysts said it was unlikely to prompt a new Bank of England interest-rate cut next week.
The Office for National Statistics (ONS) said that wage growth, excluding bonuses, dropped to 5.1 per cent in the three months to the end of July from 5.4 per cent in the second quarter of the year.
Over the same reporting period, the unemployment rate dipped to 4.1 per cent from 4.2 per cent, the ONS added.
“The further easing in wage growth will be welcomed by the Bank of England (BoE),” said United Kingdom (UK) economist at research group Capital Economics Ashley Webb.
“But we doubt this will be enough to prompt a back-to-back 25 basis points interest rate cut.”
The BoE will announce its latest interest-rate decision on September 19 having cut borrowing costs in August to five per cent. That was its first reduction since the COVID-19 pandemic broke out in 2020, as British inflation retreated back to the central bank’s target.
Analysts are also awaiting UK inflation figures due next week for further signals around potential cuts.
The ONS yesterday also noted that job vacancies had fallen again.
“However, the total number still remains a little above its pre-pandemic levels,” added ONS director of economic statistics Liz McKeown.
The data showed that wages, including bonuses, increased by four per cent in the three months to the end of July compared with a year earlier.
The new Labour government was set to increase state pensions by the same amount from next April, in an announcement included in its maiden budget next month. Pensioners receive a minimum increase of 2.5 per cent each year.
This can be higher, however, if either average earnings or inflation come above the level. This is known as the “triple lock” guarantee.
According to the readings used by the government, average earnings are higher than inflation, which has fallen sharply in recent months. Last year pensioners got an 8.5 per cent increase.
