UK pay growth rises, adding to pressure to hold interest rates
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Annual growth in average weekly earnings increases by 5.6% in three months to end of November. UK pay growth rose in November, official figures show, keeping pressure on the Bank of England to hold interest rates amid concerns over lingering inflationary pressures.
With the government under pressure on the economy, the Office for National Statistics (ONS) said annual growth in average weekly earnings rose by 5.6% in the three months to the end of November, up from 5.2% in the three months to October. City economists had forecast total annual pay growth would accelerate. The reading matched estimates for total pay, but was marginally higher than expected for regular pay, excluding bonuses.
Liz McKeown, the ONS director of economic statistics, said: “Pay growth picked up for a second consecutive period, again driven by strong increases in the private sector. Real pay growth, which excludes the effects of inflation, increased slightly.”.
The figures also showed the UK unemployment rate for people aged 16 years and over rose to 4.4% in the three months to November, up from 4.3% in the three months to October, highlighting some evidence of a cooling jobs market. After turbulence in financial markets earlier this month, the latest snapshot is likely to complicate the picture for the chancellor, Rachel Reeves, amid warnings that higher borrowing costs could require tax increases or spending cuts to avoid her breaking her fiscal rules.
The figures will be closely watched by the Bank as it considers whether to cut interest rates from the current level of 4.75% on 6 February. Expectations for a cut had risen after better-than-expected inflation data last week, but experts warn stronger pay growth could stoke higher prices.
