UK wage growth is the weakest since February 2021, according to REC survey

LONDON (Reuters) – Britain’s labor market showed further signs of slowing in September as wage growth increased at the slowest pace in almost four years. That’s according to a survey that should reassure the Bank of England as it considers cutting borrowing costs again.

The Recruitment and Employment Confederation and KPMG said on Monday that their measure of starting salary growth for people hired into permanent roles has reached its lowest level since February 2021.

The monthly permanent job placement index continued a two-year decline, but the decline in hiring was weaker than in August.

Jon Holt, chairman and senior partner of KPMG in the UK, said businesses faced uncertainty over Britain’s tax and other economic policies ahead of Finance Minister Rachel Reeves’ first annual budget on October 30.

Reeves has warned that some taxes could rise as Prime Minister Keir Starmer’s new Labor government seeks to boost public services and investment.

Holt said easing wage pressures could “strengthen the case for further cuts in interest rates” at the BoE’s next meeting in November.

Last week, BoE Governor Andrew Bailey said the central bank could become “a little more active” and cut interest rates more aggressively if inflation pressures continue to ease.

But the central bank’s chief economist Huw Pill struck a more cautious tone on Friday, saying he preferred a step-by-step approach.

The REC/KPMG survey also found that the number of available candidates for jobs continued to increase, while the number of job vacancies fell for the 11th consecutive month and at the fastest pace since March.

(Reporting by Suban Abdulla; Editing by William Schomberg)