Wage growth is slowing but there is a reason to celebrate as interest rates are set to fall


WORKERS may be unlikely to cheer the news but a slowing of wage growth in the UK is being hailed as a positive sign that interest rates are poised to fall.

Wage figures out yesterday showed that average weekly earnings grew at an annual rate of 7.7 per cent over the past three months, down from 7.9 per cent a month earlier.

Wage growth is slowing but there is a reason to celebrate as interest rates are set to fall

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Wage growth is slowing but there is a reason to celebrate as interest rates are set to fallCredit: Getty

Brits now earn on average £673 a week, £50 more than during the same period last year.

That rate of growth is still high by historic standards, but economists said that there are signs of a slowdown in the labour market.

As a result, markets think the Bank of England will not have to raise rates further and they could start coming down in the Spring.

Jake Finney, an economist at PWC, said real pay was outstripping inflation, meaning that pay was no longer being eroded.

He added that it “should herald an end to the worst squeeze of living standards”.

Pay had been partly bolstered by civil servants receiving a £1,500 cost-of-living bonus, the Office for National Statistics said.

Meanwhile private sector wage growth has flatlined, suggesting that companies are not having to offer bigger salaries to recruit staff.

Nye Cominetti, of the Resolution Foundation, said: “Pay growth looks to be cooling rapidly in the private sector.

“This will reassure the Bank of England that rising rates are having their desired effect, though for workers it could mean the recent period of rising real wages is ending soon.”

Money markets and economists have reacted by saying that the cooling pay data tackles one of the Bank of England’s biggest fears that the economy was in a wage spiral, which was driving inflation higher.

This is because if people are paid more so they can afford to buy more expensive goods, companies will simply keep pushing up prices to afford the higher labour costs.

Inflation figures out today are expected to show the rate of consumer price increases has fallen to less than 5 per cent after a sharp fall in energy costs.

ALDI’S OLDIES

ALDI has a gran design to boost Christmas sales — by featuring older models in its latest adverts.

The discount supermarket is using pensioners to model its cut-price fashion range — including a festive jumper for £9.99 and fleecy clogs at £5.99.

Aldi has featured older models in its latest adverts

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Aldi has featured older models in its latest adverts
The supermarket has been following in the footsteps of luxury brands

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The supermarket has been following in the footsteps of luxury brands

The brand is following in the footsteps of luxury brands with the move. Loewe used Dame Maggie Smith, 88, to star in its latest handbag ad.

Charlotte Rampling, 77, is currently fronting a campaign for Massimo Dutti, while Dame Mary Berry, 88, worked with British luxury brand Burberry ast month to promote it.

IN DEEP WATER

ALMOST all UK water companies have been ordered to return millions of pounds to customers after missing targets.

Regulator Ofwat said Thames Water, which faced a summer cash crunch, would be hit with a £74million penalty.

Anglian Water has to refund £27million, and Southern Water £21million.

The poor performance is linked to water pipe leaks and sewage spills into rivers and seas.

However, Severn Trent will be allowed to increase bills by £89million as it met targets.

THE number of firms going bust hit 2,315 last month, an 18 per cent rise on last October.

Restructuring experts blamed higher costs, a worsening consumer environment and the end of support schemes that kept firms afloat during Covid.

BODY SHOP SOLD

THE BODY SHOP has been sold to the owner of trainers chain Footasylum in a £207million deal.

Aurelius Group, a private equity firm, is understood to have committed to maintaining the toiletries brand’s eco-credentials.

The seller was Brazilian cosmetics group Natura, which also owns Avon.

It had bought The Body Shop from L’Oreal in a £850million deal back in 2017.

The Body Shop has about 250 shops in the UK and 2,800 around the world.

£5.6BN IS A MINER AMOUNT

FTSE 100 commodities trader and miner Glencore has paved the way for a break-up of the company after striking a £5.6billion coal deal.

Glencore, which is based in Switzerland, yesterday said it had ended a months-long pursuit of Canada’s Teck Resources and agreed to buy a majority stake in its coal arm instead.

Glencore has paved the way for a break-up of the company after striking a £5.6billion coal deal

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Glencore has paved the way for a break-up of the company after striking a £5.6billion coal dealCredit: Refer to Caption

Teck spurned a $23billion (£18.4billion) full takeover offer in April.

Instead Glencore’s chief executive Gary Nagle will make his mark by spinning off its enlarged thermal coal division into a new company and listing that on the New York Stock Exchange.

He told The Times that listing in New York rather than remaining in the City would “get a better valuation, the best demand for the business”.

Shares in Glencore rose by 19.55p, or 4.54 per cent, yesterday, valuing the business at £55billion.

VODA BIG HANG-UP

VODAFONE admits it has lost 49,000 contract customers in the UK after hiking prices by 15 per cent this year.

However, Vodafone’s UK business enjoyed sales growth of 4.1 per cent, helped by the popularity of its Voxi service, offering unlimited social media use for £12 a month.

Overall the company posted a 44 per cent slip in operating profits to £1.47billion.

It is still going through regulatory approvals to combine its UK mobile business with THREE.

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