Pound jumps as UK unemployment falls to lowest since 1974, but basic pay lags inflation – as it happened

Rolling coverage of the latest economic and financial news

• Pound rallies as further interest rate rises expected
• Intro: Real regular pay fell 1.2%, unemployment down to 3.7%
• Total pay jumped 7%, but basic pay only up 4.2%- behind inflation
• Wage squeeze is going to get worse
• More people economically inactive, employment below pre-Covid level
• More vacancies than people classed as unemployed
• M&S chair: Food inflation could hit 10%

Jonathan Boys, labour market economist for the CIPD, the professional body for HR and people development, is struck by the wide gap between public and private sector pay growth.

As the earnings data show, the squeeze is hitting some harder than others. The difference between total pay growth in the private and public sectors - 8.2% and 1.6% respectively - is stark.

Further help from government is inevitable and this should be targeted where need is greatest.

The unemployment rate is now lower than at any time since the early 1970s. Combined with half a million more vacancies in the economy than before the pandemic, there are plenty of job opportunities for people who are looking for them.

This is good news for households but it causes difficulties for businesses trying to retain staff and recruit for the right skills: our surveys show a massive 42% of firms citing skills shortages' as having a negative impact on their organisation. This morning's data puts the onus on government to prioritise workplace skills policy, to ensure firms have access to the talent they need."