Bank of England Governor Andrew Bailey yesterday sounded the alarm over the darkening outlook for jobs as it left interest rates on hold – but opened the door to a cut in August.
He said there had been ‘signs of softening in the labour market’ as a Bank survey found that UK employers are slamming the brakes on pay rises as a result of Rachel Reeves’ £25billion raid on employers’ National Insurance.
Global events are also ‘highly unpredictable’ as conflict in the Middle East pushes up oil prices and US tariffs also take their toll.
The comments are the latest evidence undermining Government claims that it is turning the economy around.
Recent figures showed more than 100,000 UK jobs were lost in May with a quarter of a million axed since the Budget.
Growth in the first quarter of this year was followed by a downturn in April, when GDP slumped 0.3 per cent.
Jobs gloom: Bank of England Governor Andrew Bailey said there had been ‘signs of softening in the labour market’
Employment growth is also ‘near zero’. The Bank’s monetary policy committee left interest rates at 4.25 per cent, citing the need for a ‘gradual and careful’ approach.
But three of the nine members voted for a cut, fuelling hopes of a rate slash in August.
Inflation is 3.4 per cent and expected to climb close to 4 per cent by the end of the year. The feedback from the Bank’s survey was bleak.
Many firms are in ‘wait-and-see’ mode on tariffs while investment intentions are being held back by factors such as ‘fragile demand, trade developments, Government tax and labour policies’.
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