UK Unemployment Falls But So Do Wages – GBP Down
It has been announced that UK unemployment has fallen to 2.08 million which means the overall rate is now down to 6.4% which is further good news for the UK economy. What is not such good news is that average wage figures fell by 0.2% so while more people are in work it does seem that people are going back to work on lower salaries. The fact that wages are falling is bad news as it is well out of sync with inflation which means that while the price of goods and services (and house prices in many parts of the UK) are going up what people are earning is falling and this could create a dangerous situation. If people cannot afford goods and services it could lead to retailers having to lower prices which may lead to a sharp fall in inflation, a situation the Eurozone are currently trying to deal with, while there is a chance we will see more high street names fall into administration as we have witnessed over the past few years leading to job losses and therefore the unemployment rate rising. So, despite all the positive news for the UK of late the Bank of England will be concerned about the falling wage levels and this may be mentioned at the Quarterly Inflation Report which is due at 10:30am. At the time of writing Sterling has weakened slightly against both the Euro and the USD so for many clients looking to transfer money internationally they will be hoping for a positive announcement from the BoE.
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