MNI BRIEF: UK Labour Market Could Weaken in 2025 - Think Tank

The UK labour market risks weakening this year due to high interest rates and above-inflation increases to the minimum wage, the Resolution Foundation think tank said in a press release on Monday. 

"The short-term impact could be job displacement and higher unemployment," it said, though it added that there are signs that these factors will allow more productive companies to outcompete struggling firms. The "early effects of AI" may also already be visible, it said.

The Bank of England voted five-four to cut its policy rate to 3.75% on Dec 18. Governor Andrew Bailey, who voted for a cut, said in the minutes that "while I do not yet see conclusive evidence of a sharper downturn in the labour market, we should be vigilant." Catherine Mann and Clare Lombardelli both voted to hold Bank rate at 4% but acknowledged the risk of further weakness to the labour market.

Treasury Minister Torsten Bell was the foundation's director until summer 2024. (See MNI INTERVIEW: UK Fiscal Framework Stifles Growth - Benigno)