The Bank of England could decrease rates of interest as early as December after new figures confirmed the job market is weakening and wage growth is slowing, an knowledgeable has claimed. Unemployment in the UK elevated to 5% in the three months to September, according to the newest information from the Office for National Statistics (ONS). It’s the highest degree seen since early 2021 and above analysts’ expectations of 4.9%.
The rise in unemployment comes alongside a slowdown in pay. Regular wages excluding bonuses grew by 4.6% in the third quarter, down from 4.7% the earlier month. Total earnings, including bonuses, also dropped to 4.8%, from 5%. Richard Carter, the head of fixed curiosity analysis at Quilter Cheviot, said the figures could tip the Bank of England towards cutting charges just in time for Christmas.
He said: “An early Christmas present could come in the form of an interest rate cut from the Bank of England following a rise in unemployment and a softening in wage growth.
“The monetary policy committee had a tight 5-4 split on whether to hold or cut rates at last week’s meeting, with Andrew Bailey’s deciding vote erring on the side of caution.”
The Bank’s next rate of interest resolution is due on December 18, and markets will be watching intently for indicators of a change in direction.
Mr Carter added: “Today’s figures from the Office for National Statistics show wage growth pressures, albeit still relatively high, are slowly easing. Any further signs of easing in the next labour market print could sway a few more on the committee to cut.”
ONS estimates also show the quantity of payrolled workers fell by 117,000 between September 2024 and September 2025, and by 32,000 on a month-to-month foundation.
Initial figures for October show a further month-to-month drop of 32,000, although the ONS has warned early estimates may be revised.
The quantity of job vacancies stays broadly secure at around 723,000 between August and October.
But the ONS warned its unemployment price should be handled with warning due to current modifications in methodology.
ONS director of financial statistics Liz McKeown said: “Taken together, these figures point to a weakening labour market.”
The upcoming Budget on November 26 could also play a function in hiring choices, according to Mr Carter.
He said: “With the Chancellor’s budget now just two weeks away, many businesses will have shelved any major hiring plans.
“Having already faced a significant rise in national insurance costs earlier in the year, they will likely be nervous to make any real commitments until they know whether further costs are heading their way.
“The BoE will have time to assess the market’s reaction to the budget, and will receive another labour market print prior to its next interest rate decision.
“While today’s figures make a rate cut appear slightly more nailed on, much could still change in the coming weeks.”
The Bank of England has said it expects the unemployment price to keep close to 5% for the next few years.
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