British businesses are showing the weakest hiring plans since 2020, according to a Bank of England (BoE) survey released on Thursday. At the same time, companies expect consumer prices to
rise at the fastest pace since early 2024 — a mix that highlights the challenges still facing the central bank.
In the three months to September, firms said they don’t expect to add more staff over the next year. That’s the first time since January they’ve signaled no growth in hiring, and before that, the last such reading was during the pandemic in 2020.
Month-to-month expectations remain volatile: after predicting a 0.5% drop in August, companies now forecast a small 0.5% increase in headcount over the next year.
Official tax records show the number of employees has been falling for seven straight months. Meanwhile, unemployment has ticked up to 4.7% — the highest level since 2021 — though that figure is based on a survey with known reliability issues.
For the BoE, a cooling job market could help slow down wage growth, which in turn might ease inflation. The bank expects inflation to have reached about 4% in September, double its 2% target.
Even so, analysts believe these survey results could make policymakers cautious about cutting interest rates any further this year. Rob Wood, chief UK economist at Pantheon Macroeconomics, noted that “wage and price pressures remain stubborn, recruitment difficulties slightly worsened despite weak employment, and firms’ inflation expectations rose.”
Businesses surveyed expect consumer price inflation to run at 3.4% over the next 12 months — the same as in August, but still the highest three-month average since February. On top of that, companies said they plan to raise their own prices by 3.7%, unchanged from earlier expectations. Photo by Eluveitie, Wikimedia commons.