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UK employers scale back expected wage growth, Bank of England says - REUTERS

JULY 04, 2024

LONDON, July 4 (Reuters) - British employers expect their wage bills will grow more slowly over the coming 12 months, according to a survey that will give the Bank of England more confidence it can cut interest rates in the coming months.

Watched closely by members of the Monetary Policy Committee, the BoE's own Decision Maker Panel survey showed expected year-ahead wage growth fell by 0.3 percentage points to 4.2% on a three-month moving-average basis in June.

It was the lowest reading since the series started in May 2022.
The official measure of earnings growth has been running too hot for most BoE rate-setters to cut interest rates, but Thursday's survey suggested it should cool markedly - something that could persuade more MPC members into loosening policy.

With Britons voting on Thursday to elect the next government, the prospect of an interest rate cut in coming months may have come too late to help Prime Minister Rishi Sunak's campaign to return the Conservative Party to power.

But it could be an early boost for an incoming government, which opinion polls suggest will be led by Keir Starmer's Labour Party in what looks set to be a landslide victory.
"Annual wage growth was 6.0% in the three months to June, unchanged from the three months to May," the BoE said. "Firms therefore expect their wage growth to decline by 1.8 percentage points over the next 12 months based on three-month averages."

Companies surveyed by the BoE also expected to raise their own selling prices at a slower pace in the year ahead, while expecting consumer price inflation to moderate. Adding to signs of cooling price pressures, a business survey this week from S&P Global showed cost pressures in the dominant services sector eased to their lowest since February 2021.


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