Yael Selfin, Chief Economist at KPMG UK noted that the rise in pay growth expected to be short lived as labour market “faces headwinds.”
Yael Selfin from KPMG UK added that while unemployment rose to 4.4%, it remained “fairly low in the three months to November.”
They also stated that pay growth in the UK “ticked up to 5.6%, but this was largely due to base effects.”
KPMG UK now expect pay growth “to trend downwards over the coming year, with the backdrop of slowing labour market activity.”
Selfin further noted:
“Forward looking indicators suggest a significant weakening in hiring intentions due to the upcoming tax rises in April. We expect this to act as a headwind for labour market activity in the near term, likely translating into a small pick up in headline unemployment over the coming months. Nonetheless, once the impact of the Budget passes together with the expected improvement in economic activity, conditions should stabilise in the labour market.”
They also mentioned:
“Wage growth is expected to return closer to levels consistent with the inflation target this year, despite the recent increase. The rise in business costs due to the Budget measures should have a cooling effect on labour market activity and make higher wage settlements less likely. As a result, it is anticipated the Bank of England will opt for an interest rate cut next month, and two further rates cuts in 2025.”
As covered, KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with “approximately 18,000 partners and staff.”
The UK firm recorded a revenue of “£2.96 billion in the year ended 30 September 2023.”
KPMG is a global organization of “independent professional services firms providing Audit, Legal, Tax and Advisory services.”
It operates in 143 countries and territories with “more than 273,000 partners and employees working in member firms around the world.”
Each KPMG firm is a “legally distinct and separate entity and describes itself as such.”