For all the talk of AI-driven productivity, many organisations still haven't seen wage costs fall or even clearly stabilise. In a recent PwC survey of more than 4,400 chief executives, only 12% said their AI investments had delivered both higher revenue and lower costs, while more than half reported no meaningful business impact at all. That gap between expectation and reality is becoming harder to ignore.
It reflects what businesses tell us they are less confident about hiring staff due to sky-high employment costs and a tidal wave of new employment legislation coming down the track. While there has been some easing of cost pressures - with average earnings including bonuses slowing to 4.7 per cent in the three months to October - labour costs remain a challenge.
The decision reflects the MPC's view that, although inflation has peaked, further evidence is needed to confirm a sustained return to the 2% target. The latest ONS figures show CPI at 3.8% in September, broadly in line with BCC's forecast of 3.7%. The IMF also expects the UK to record the highest inflation in the G7 this year and next. So, the key question is: will UK inflation stay higher for longer, and will interest rates remain higher to control it?
Today's figures are a stark warning: retail jobs have plunged to a record low with 97,000 jobs lost over the last year, and almost 400,000 lost over the last decade. The rising cost of NICs and NLW, together costing the industry over £5 billion this year, are hitting retail employment hard. And worse could be yet to come, with the Employment Rights Bill having a "materially negative impact on employment" according to the OBR.
