UK pay growth has seen a significant increase at the end of last year, with total pay rising by 6% annually in the October-December quarter. This rise, faster than expected, has led to real wages increasing as well. This acceleration in pay growth poses a challenge for the Bank of England, which recently cut interest rates amid concerns about inflationary pressures.
The latest employment data also shows that employment and unemployment both rose in the quarter, while the number of economically inactive individuals decreased.
The UK employment rate for people aged 16 to 64 was estimated at 74.9%, with the unemployment rate at 4.4% and the economic inactivity rate at 21.5%. Meanwhile, the UK Claimant Count for January 2025 increased to 1.750 million.
In other news, Thames Water has secured court approval for an emergency debt package worth up to £3 billion, helping the company avoid collapse for a few more months. The company has been struggling with debts of around £19 billion, contributing to underinvestment in infrastructure.
Additionally, South East Water and Anglian Water are appealing to raise customer bills higher than approved by regulator Ofwat, citing the need for significant investment in infrastructure.
Overall, while pay growth in the UK has picked up, concerns remain about inflationary pressures and the need for continued monitoring by the Bank of England. The employment market continues to show signs of stability, with challenges ahead related to ongoing economic reforms and investment needs.
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