Unemployment in the United Kingdom reached 5% in September, beating forecasts of 4.9% and marking the highest rate of joblessness since May 2021. Sterling fell sharply against the euro and the US dollar this morning as markets digested the news, which comes just a few short weeks before the autumn Budget (26 November).
Average earnings cooled at the same time, down to 4.8% including bonuses and 4.6% excluding bonuses over a three-month period. Taken together, this data supported the case for an interest rate cut at the Bank of England’s December meeting, which helped explain much of the pound’s early-morning weakness.
As Budget day (26 November) approaches, the stream of rumours shows no sign of slowing. Yesterday, the Financial Times reported Rachel Reeves was considering raising income tax by two pence, offset by a two pence cut to national insurance contributions. In theory, that means those in work will be unaffected, while pensioners and landlords will face higher taxes. That remains just a rumour, we must stress.
Financial markets enjoyed a blistering Monday, fuelled by hopes that the longest US government shutdown in history would end soon. Eight Senate Democrats broke ranks to agree to a compromise that would see funding extended until the end of January, although one that falls short of guaranteeing health care demands.
Stock markets approached record highs as the mood turned more optimistic. The House of Representatives must still pass the spending bill, but that looks likely given the Republican majority in the lower chamber.
The row over the BBC’s panorama programme on Donald Trump rumbled on into a new week. After the broadcaster’s director general and CEO stepped down, the US president threatened to seek legal compensation of $1 billion. Despite the resignations, the BBC continue to claim the editing was “an error of judgment”.
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