The latest official jobs data is out and showed, among other things, that the UK unemployment rate was estimated at 4.3% in January to March 2024, above estimates of a year ago, and increased in the latest quarter.
Additionally, annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 6.0% in January to March 2024, and annual growth in total earnings (including bonuses) was 5.7%.
Newspage asked brokers what this could mean for the base rate.Â
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Ranald Mitchell, director at Charwin Private Clients:
“This data doesn’t support the case for a base rate cut any time soon. In fact, the wage growth figure may just have kicked a June rate cut into the long grass.
“There are red flags all over this data, specifically the rise in unemployment, but the Bank of England may well focus on the fact wages are still rising. Borrowers urgently need that first base rate cut, but they may need to be patient based on this evidence.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“For the Bank of England, the rise in unemployment may be trumped by the ongoing strength of wage growth and potentially put a stick in the spokes of a base rate cut in June, meaning more pain for borrowers.
“The rise in unemployment is symptomatic of the pressures on businesses to cut costs wherever possible. The combination of Brexit, Covid, double-digit inflation and high interest rates is taking its toll on the UK labour market.”
Ben Perks, managing director at Orchard Financial Advisers:
“The rise in unemployment is disheartening but not unexpected given the extraordinary pressures of the past four years. Behind the data, of course, are the people whose lives are being impacted.
“It doesn’t paint a great picture of the state of our economy currently and certainly seems at odds with the rhetoric we’ve been hearing from the Tories in the media. These are pretty harmful figures ahead of a General Election for the current administration, and Labour will undoubtedly pounce on them.”
Michelle Lawson, director at Lawson Financial:
“While disappointing, I think few will be surprised by the rise in unemployment. Companies of all sizes have been under the cosh for too long and the consequences are increasingly apparent. The cost of living crisis is still taking its toll. We need a General Election to try and breathe some hope back into the British economy.
“The continued strength in wage growth will also not help borrowers, as this could see the Bank of England once again err on the side of caution and leave rates on hold.”
Craig Fish, director at Lodestone Mortgages & Protection:
“Though unemployment rose, continued strong wage growth means that the Bank of England decision at the next meeting is increasingly likely to be a hold. This is disappointing and not what households and businesses need.
“Rising unemployment confirms the pressure the economy is under and borrowers desperately need that first cut, which is proving increasingly elusive. The recent news that we’re out of recession doesn’t ring true, as the cost of living crisis continues to rumble on and many households are under immense pressure.”
