UK Labour Market Lost More Momentum Before Budget

• Britain's jobs market weakened in the run-up to the November 2025 budget announcement by Finance Minister Rachel Reeves, according to official data published on Tuesday, January 20, 2026, which showed a drop in employment and a cooling of wage growth.
• A fall of 38,000 first reported for November 2025 was revised to show a decline of 33,000 people in payrolled employment. In addition, annual pay growth in the private sector excluding bonuses, which is being closely watched by the Bank of England (BoE), slowed to 3.6% in the three months to November 2025, its slowest rise since November 2020, from 3.9% in the three months to October 2025.
• Overall core pay growth slowed to 4.5% in the September-to-November 2025 period, compared with a year earlier, slightly below the 4.6% growth in the three months to October and in line with economists' expectations in a Reuters poll.
• The jobless rate held at 5.1%, as expected. The number of employees on payroll has fallen again, with reductions over the last year concentrated in retail and hospitality, and reflecting ongoing weak hiring activity.
• The Bank of England is watching pay as a gauge of how long Britain's still high rate of inflation is likely to last. Financial markets on Monday showed that at least one 0.25 percentage-point interest rate cut was fully priced in for 2026, with a roughly two-thirds chance of two cuts.

(Source: Reuters)