Market update: UK wage growth eases off, gold shines again as tariff threats keep investors on edge
Susannah Streeter, chief investment strategist, Wealth Club: ‘’Nervous employers are still holding off hiring amid rising payroll costs and economic uncertainty. The UK’s unemployment rate has stayed stubborn at 5.1% but it looks set to head higher in the months to come. Fresh tariff threats could see the door slammed on more jobseekers, as some firms batten up the hatches as harsher trade winds whip up again. Conditions are tougher in the labour market, as many companies keep vacancies unfilled, anxious not to increase overheads further. As the competition for jobs has increased, wage growth has fallen back. In the private sector wage growth has come down markedly, with annual average regular earnings at 3.6%, down from 3.9% at the last reading. The public sector annual growth rate stayed at the hot level of 7.9% but it’s due to some public sector pay rises being paid earlier in 2025 than in 2024 – this effect will start to ease off.
As conditions cool off in the jobs market, the Bank of England may be more inclined to cut interest rates sooner rather than later, and the chances of a reduction in February have increased. Policymakers will be watching the latest tariff turmoil closely to try and work out what the effects could be on the UK economy down the line.
With transatlantic relations so fraught, equities are set to be on the back foot again today. President Trump’s willingness to break old alliances and sow trade chaos, to further what he believes to be in the US interests, are causing anxiety among investors. There’s been a fresh surge into safe havens with gold again breaching record levels. The precious metal continues to shine as the Greenland crisis becomes more entrenched. Earlier it breached $4,718 an ounce. European leaders are prepared to meet to discuss retaliatory measures, as President Trump’s dialled up his determination to take control of the island. With both sides so entrenched, negotiation for now looks highly difficult, and it’s likely to keep investor nerves on edge.”