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Bank of England governor Andrew Bailey has sounded a pre-Budget warning over jobs as he revealed that ‘a lot of companies talk to me about reducing their hiring’. Mr Bailey told US broadcaster CNBC: ‘I go around the country and there’s a lot of talk about lower employment.’ The comments further illustrate the dismal state of the economy under Labour, amid slumping business confidence and stubbornly-high inflation. They come a day after the Bank of England revealed that recent growth had been ‘subdued’ partly due to uncertainty over this month’s Budget. Employers are still reeling from Rachel Reeves’ first Budget last year when she staged a £25 billion raid on employer national insurance. The tax hike, together with a jump in the minimum wage, has made it costlier for firms to hire staff. Some are also responding by keeping a lid on pay increases or putting up prices for consumers. Mr Bailey painted a picture of companies not hiring – rather than actively firing staff. ‘It’s not so much people being made redundant, but it hasn’t particularly picked up,’ he said. ‘A lot of companies talk to me about reducing their hiring and their hiring intention, so I think we are seeing some softening the labour market. ‘I think we’re seeing a bit of that in the way pay measures, particularly in the private sector, are coming down now.’ The governor’s comments chime with recent business surveys showing that private sector employers have been cutting jobs over the past year since the 2024 Budget. Official figures show unemployment has risen to 4.8 per cent, the highest rate in four years. The number of payrolled employees in the UK is estimated to have fallen by 100,000 over the past year. Meanwhile, overall growth has remained sluggish while inflation, at 3.8 per cent, is the highest among the G7 group of advanced economies. That has left the Bank hesitant to cut interest rates – which it this week left on hold. However, officials believe inflation has now peaked and hinted that rates could be cut next month, when rate-setters meet in the run-up to Christmas. That will also give the chance for the Bank to assess the impact of the Budget. A feared income tax hike is likely to dampen the economy, adding to the case for a rate cut. Mr Bailey said yesterday: ‘I'll certainly be looking at the rest of this year, and the evidence we see between now and our last meeting.’
