UK Wage Growth Slows as Iran War Fuels Cost-of-Living Pressure

Official figures from the Office for National Statistics (ONS) show average growth in total earnings—including bonuses—fell to 4.1 % in the three months to June, down from 4.3 % in the preceding three-month period. The headline unemployment rate held steady at 4.9 %. The slowdown occurs against a backdrop of heightened living-cost pressures linked to the economic fallout from the Iran war, which analysts say is pushing inflation toward 3 % in July.

The Guardian

Private-sector pay growth eased to 2.8 %, the weakest rate since October 2020, while public-sector earnings rose to 6.1 % after the latest NHS pay awards. Vacancies edged lower as small businesses reported rising employment costs. Economists note that the softer labour market could reduce pressure on the Bank of England to raise interest rates, with the central bank signalling that a weaker backdrop may help contain persistent inflation.

The Guardian

Pat McFadden, work and pensions secretary, welcomed “signs of progress” and highlighted government measures to overhaul the benefits system, introduce a youth-jobs grant, and support independent living. Alan Milburn, former Labour cabinet minister leading a review of youth employment, called for “turbocharging” internships for young people with special educational needs and urged primary schools to identify at-risk children earlier.

The Guardian

• Total earnings growth (incl. bonuses): 4.1 % (June three-month period)

The Guardian

• Private-sector earnings growth (excl. bonuses): 2.8 % (weakest since Oct 2020)

The Guardian

• Public-sector earnings growth: 6.1 % (NHS pay awards)

The Guardian

• Unemployment rate: 4.9 % (unchanged)

The Guardian

• Annual real earnings growth: 1.3 % (June three-month period)

The Guardian

• “On the face of it, the latest labour market report looks relatively benign. Unemployment, employment and inactivity remain broadly stable, while vacancies edged down but are essentially levelling off. The jobs market remains soft, but it isn’t collapsing.” — Jake Finney, a senior economist at PwC UK — Jake Finney, senior economist at PwC UK

The Guardian

The latest labour-market snapshot underscores the challenge for the new prime minister’s administration to balance wage growth, inflation, and youth unemployment as external geopolitical shocks continue to shape the UK economy.

The Guardian