21 July 2026
If you are covering the latest UK labour market and public sector finances data, please see the following comment from Jonathan Raymond, investment manager at Quilter Cheviot:
“Andy Burnham will have little time for a honeymoon period, having taken office amid a flurry of key economic data and with the Bank of England’s next interest rate decision just over a week away. Today’s labour market and public finances figures will be just one of the many challenges sat waiting for him in his in tray.
“The labour market has continued to cool as payrolled employee numbers fell by 85,000 on the year, although they changed little on the month with a small 3,000 uplift. The unemployment rate held at 4.9%, while regular earnings growth remained at 3.4%, suggesting that although hiring conditions are softening, wage pressures have yet to fade.
“That leaves the Bank of England in a familiar bind. A weaker jobs market would typically strengthen the case for lower interest rates, but with inflation data due tomorrow and expectations that price pressures may edge higher, policymakers are unlikely to want to move too aggressively.
“Burnham placed a clear emphasis on helping more young people into work in his Downing Street speech yesterday, and today’s figures outline why. Businesses have become increasingly cautious about hiring as they contend with higher operating costs and an uncertain economic backdrop. Creating opportunities for younger workers while supporting business confidence will be one of the key tests of the new government.
“The public finances present another difficult challenge, although borrowing has come in a little better than might have been expected, as receipts rose while expenditure decreased slightly, largely due to lower inflation linked debt interest costs. Borrowing for June was £16.0 billion, £7.9 billion less than the same time last year and coming in marginally lower than the OBR’s forecast. However, it remains the tenth highest April to June period since monthly records began in 1993. Meanwhile, debt interest stood at £11.8 billion in June, £5.3 billion less than in June 2025 but still the fourth highest June on record. Even with this year-on-year fall, the reality is that there is little room for expensive policy commitments.
“Burnham’s suggestion that he would utilise flexibility within the fiscal rules resulted in gilts weakening slightly yesterday, but his appointment of John Healey as Chancellor is a sign that the new Prime Minister will respect the bond markets as a check on his radicalism as opposed to making major changes that risk unsettling the rules. He is expected to set out his initial plans today, with the first announcement coming in the form of a tax cut on household electricity bills which is said to be funded by the cancelled Digital ID programme. It is vital that any changes made are accompanied by a credible and affordable plan to ensure they support, rather than undermine, long-term economic stability.”
