UK: Brexit still priority No. 1 for the BoE despite stronger wages – ING
James Smith, Developed Markets Economist at ING, points out that at 3.1%, UK average weekly earnings (ex. bonuses) are now the highest in almost a decade, following what has been a particularly strong summer for pay.
Key Quotes
“As a measure of just how good the momentum has been, the 3M/3M annualised change in wage growth now stands at 3.8%, noticeably higher than the 2.5-2.7% pace seen through the first half of 2018.”
“Given that wage growth has been central to the Bank of England's rate hike rationale, this trend is likely to keep them on their tightening track. However that is heavily contingent on Brexit, and we think the latest rise in uncertainty could see growth momentum slow once again as we head into the winter.”
“Even if the jobs numbers do hold up, there is still a risk that consumers begin to get more cautious if increased Brexit warnings from businesses see individuals start to reassess their job security.”
“So despite the better wage growth figures - that might otherwise see the Bank of England accelerate its tightening plans.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
