International News

UK pay falls at fastest rate in more than 20 years

Good morning.

We start the day with a stark reminder of how the cost-of-living crisis is eating away at household budgets.

Real-terms pay excluding bonuses tumbled 3.4pc in April, marking the biggest decline since records began in 2001, according to the latest ONS figures.

Over the three months to April, they fell 2.2pc, which is the biggest drop in a decade. While bonuses are helping to cushion some of the blow, not all workers are benefiting.

The numbers show how pay rises are failing to keep pace with soaring prices, with overall earnings rising at less than half the rate of inflation.

The figures highlight the challenge faced by the Bank of England ahead of this week’s interest rate decision, as the MPC looks to balance spiralling inflation with the risk of a recession.

5 things to start your day 

1) Booming housing market creates 36,000 millionaires in a year  Britain now boasts 609,000 high-net-worth individuals 

2) Shell plans to expand amid energy market chaos  The FTSE 100 company plans to invest £20bn-£25bn in the UK 

3) How the Bank of England got it wrong again on Britain’s slide towards recession  Britain’s recovery from the pandemic has been derailed by the cost of living crisis 

4) Binance ‘pauses’ Bitcoin withdrawals amid market collapse  Markets in chaos as Bitcoin falls to its lowest level since December 2020

5) Tesco accused of ripping off Lidl logo to ‘ride on discounter’s coattails’  Grocer hits back that the yellow circle trademark is ‘a figment of Lidl’s legal imagination’

What happened overnight 

Equity markets tumbled again on Tuesday to extend a global rout fuelled by fears of recession, with the Federal Reserve preparing to ramp up interest rates as inflation shows no sign of slowing. 

That has ramped up fears that the world’s top economy is heading for a recession, and on Monday Wall Street plunged with the broad-based S&P 500 sinking into a bear market after dropping more than 20 percent from its recent peak.

And the selling continued in Asia, with Sydney tanking five percent at one point as it reopened after a holiday weekend to catch up with Monday’s drama, while Tokyo was off around two percent and Wellington more than three percent.

Hong Kong, Shanghai, Seoul, Singapore, Taipei and Manila were also deep in the red.

Coming up today

  • Corporate: Ashtead Group, FirstGroup, Oxford Instruments, Paragon Banking Group (full-year results); Crest Nicholson, discoverIE Group, Ferguson (interims); Bellway (trading statement)
  • Economics: Unemployment rate (UK), claimant count change (UK), average earnings (UK), inflation (Ger), economic sentiment (EU), producer price index (US)

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