PerchPulse September 2022 United Kingdom Market Update

The latest and most relevant info on talent & immigration, business, and cost-of-living in the United Kingdom, to help HR leaders stay close to events and support their people strategy.

A big feathery welcome!

Hello and welcome to PerchPeek’s September 2022 United Kingdom Market Update! 

PerchPeek’s relocation specialists are here to offer insight into top mobility challenges and industry trends. We’re always keeping up with the latest international market trends that matter most to HR leaders, their teams, and their employees, helping them move and support their employees globally. Each month, we curate a monthly newsletter that includes our research and insights to better assist YOU, the HR pros!

Fly-by summary:

• The UK has entered a low-growth, high-inflation environment. 
• Job vacancies fall as the number of employees rise nearly triple the expected pace.
• The BoE raised its key interest rate to 1.75% – its first half-point rise since 1995. 
• Real wages see the biggest drop since records began in 2001.
• One-fourth of adults in the UK won’t turn on heating this winter due to rising energy costs.

Talent & Migration

UK Job Vacancies Have Fallen as Wages Take a Dive

For the first time since August 2020, UK job vacancies have fallen, with the number of employees rising by more than 70,000 in July – almost triple the expected pace. Despite more people entering the workforce, earning a livable wage is still a struggle for many. The inflation squeeze on consumers and businesses has resulted in real wages dropping at the sharpest pace on record.

According to the Office for National Statistics, the number of jobs employers are looking to fill fell by nearly 20,000 to 1.27 million in the quarter through July 2022. Pay – excluding bonuses and adjusted for inflation – fell by 3% from April through June, the most since records began in 2001. 

Now, Britain's rail, mail, and dock workers are launching massive strikes as 40-year-high inflation erodes the value of wages at a record pace. And the Bank of England expects the jobless rate will rise from mid-2023 before increasing to over 6% in three years. 

While it's not always possible to raise wages during periods of inflation, HR leaders can support employees in other meaningful ways. From providing safe spaces to discuss issues to a shifting focus on well-being, you have the power to create a solid foundation for your employees to grow.

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Housing & Cost of Living 

UK Residents Kicked off Property Ladders as Home Prices Soar

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Rising house prices and increasing interest rates make it difficult for UK residents to even dream of home ownership. According to the property website Rightmove, the average price of a home right now is £365,173 ($427,216).

The average pay in Britain is just £30,000 and, as mentioned earlier, salary increases aren't keeping up with inflation. 

The good news? A recent Reuters poll has found the surge in British house prices will come to an end next year.

However, people will still be dealing with higher interest rates; the Bank of England has already raised interest rates to 1.75% from a pandemic-era low of just 0.10%. 

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Rising Energy Costs Putting a Strain on UK Households

Surging energy prices in Europe are further driving up inflation and, according to the Bank of England, are likely to tip Britain into a lengthy recession later this year. The BoE estimates inflation will peak at just over 13% in October when regulated household energy prices are due to rise up to 80%.

These skyrocketing energy prices mean nearly one in four adults in the UK will likely not be switching on the heat at all this winter, according to a recent poll of more than 2,000 UK adults. The strain will be even higher for those who have children. About 70% said they would turn their heating on less, while 11% said they were considering taking out a loan to cover extra costs.

The average gas and electricity bill is set to increase annually from £1,971 to £3,549.

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Retail Shops Pass Along Prices to Consumers

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The annual rate of retail price inflation has reached over 12%, its highest since March 1981. Fresh food prices rose by 10.5%, the highest since September 2008, when the global financial system was on the brink of collapse. 

Food producers have been forced to pass on increases in the cost of fertilizer, wheat, and vegetable oils, large amounts of which are produced in Ukraine and Russia. Because of this, spare cash is dwindling for many. One-fifth of UK households now have an average shortfall of £60 a week between what they earn and what they need to cover essentials (transportation, rent, energy bills, food, etc.). 

If possible, HR leaders can implement a healthy snack station or in-office kitchen where employees can treat themselves to nourishment throughout the work day! This is an easy way to boost morale and productivity – plus, many retailers will offer discounts for food and snacks purchased in bulk. 

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Business & Economy 

British Consumer Price Inflation Set to Peak 9x Bank of England's Target

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With the latest jump in energy costs, British consumer price inflation is set to peak at 18 percent in early 2023.

The Bank of England's Monetary Policy Committee concluded the risks of more persistent inflation have intensified greatly this year.

According to a recent survey that showed pay pressures stabilizing after a recent rise, the confidence among British businesses has reached a new low since March 2021, as companies worry about fast-rising inflation.

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UK Economy Shrinks by 0.1% In Second Quarter as Recession Looms

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The UK has entered a low-growth, high-inflation environment. 

Britain's private sector slowed in August as factory output fell and the more significant services sector managed only a modest expansion. Britain's recovery from the pandemic stalled from April to June when the economy contracted by 0.1%.

The dip in output in the second quarter followed 0.8% growth in the first quarter, driven by the health sector – as Covid testing, and vaccine programs were wound down – and by retail, as household spending fell, according to the Office for National Statistics.

Separate figures from the Confederation of British Industry showed the first fall in factory output since February 2021 and the weakest order book since April 2021.

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Conclusion

While the news may seem grim, it's a great time for HR leaders to rally behind their employees and create an encouraging environment. By engaging with employees and letting them know you're aware of issues that may be troubling them, HR leaders now have an excellent opportunity to show their support, inspiring feelings of loyalty and gratitude in even the most difficult times. Be mindful of what people may be struggling with outside of work, and try to ease troubles with helpful programs and resources available to the organization.

‍Thanks for reading! See you next month!

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Questions About Moving Employees or What We Do At PerchPeek?

No matter where your business is located, or how many employees you have to move, the relocation experts at PerchPeek are standing by at all times to answer any and all questions that you may have about moving and taking care of your most important business asset, your team! Feel free to reach out for a call with us or book a demo to see exactly how PerchPeek can work for you and your teams!

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