What's happened
UK wage growth has slowed significantly, with total pay rising just 3.8% in the three months to August, the lowest since November 2020. Economists warn that upcoming tax increases could further impact wages as hiring declines and business confidence wanes.
Why it matters
What the papers say
According to Melissa Lawford in The Telegraph, total pay growth has reached its lowest level in four years, with a significant drop in business confidence impacting hiring decisions. Rob Wood, chief UK economist at Pantheon Macroeconomics, noted that uncertainty surrounding the upcoming Budget has led firms to pause hiring. Meanwhile, Holly Williams from The Independent highlighted that average earnings growth has also slowed, with vacancies falling to their lowest level since early 2021. This trend raises concerns about the sustainability of wage growth in the face of potential tax increases, as noted by Thomas Pugh from RSM UK, who emphasized the need for clarity post-Budget.
How we got here
The UK labour market has seen a shift in power dynamics, with recent data indicating a decline in payrolled employees and job vacancies. This follows a period of consistent wage growth post-pandemic, raising concerns about future earnings amid economic uncertainty.
Common question
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Why Has UK Wage Growth Slowed Recently?
UK wage growth has recently hit its lowest point since November 2020, raising concerns among workers and economists alike. With total pay rising just 3.8% in the three months to August, many are left wondering what factors are contributing to this decline and what it means for the future of the UK economy. Below, we explore some common questions surrounding this issue.
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More on these topics
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northÂwestern coast of the European mainland.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.