But less rosy wage growth should warn Government against increasing tax or regulatory burdens during Brexit negotiations
Responding to today’s ONS labour market figures, showing the number of people in work increased and the number of unemployed people fell, Michael Martins, Economist at the Institute of Directors, said:
“Employment continues to grow strongly, defying expectations about how the uncertainty derived from the referendum result would affect job performance. This trend of employment-heavy growth looks likely to continue, at least in the short term, with high numbers of job vacancies. Much of the employment growth came in full-time employment, again highlighting the confidence underpinning the UK’s economic outlook.
“Real wage growth, however, looks less rosy due to the depreciated pound and the attendant inflation increase. Some sectors, like services, saw quarterly real wage growth of 0.6%, while others like the finance sector saw real wage contraction of 0.7%. The latter is particularly worrying, given that most pay rises are awarded in January and financiers make up nearly a quarter of PAYE government revenue.
“At a time when tax revenues are likely to come under increasing pressure and more political uncertainty, the Government should hold off on increasing the burdens facing business, the driver of post-crisis economic growth."