UK Wage Growth Slowdown Signals Economic Caution, Potential Rate Cuts

UK wage growth for new hires has decelerated to its slowest pace in four years, reflecting heightened business caution amid economic uncertainty. Employers are pulling back on hiring and wage increases despite a rising pool of job seekers, marking a shift from years of labor shortages.

The Bank of England may find relief in softening wage pressures, which reduce inflation risks and could pave the way for interest rate cuts. However, Prime Minister Keir Starmer faces challenges in delivering promised living standard improvements as households grapple with high food costs, mortgages, and taxes.

Recruitment & Employment Confederation data shows starting salary growth at its weakest since March 2021. Companies are scaling back expansion plans amid cost pressures and economic fragility, creating Ripple effects across financial markets.