UK job seekers are starting to see the impact of Brexit, with salaries under pressure and companies advertising more contract positions as they resist committing to permanent hiring.
The average advertised salary was £32,688 ($43,174) in July, down 2.4% from a year earlier, according to an index by job search engine Adzuna published Tuesday. When inflation is taken into account, real earnings have fallen 3%, it said, Bloomberg reported.
While the Bank of England expects continued wage growth, the weaker pound may push up inflation, eating into real incomes. Adzuna said Brexit has played a role in the “widespread stagnation” in salaries, as industries such as finance with higher-paid workers delay hiring and “wait for political and economic decisions to become clearer.”
The labor market remained relatively stable in the run-up before the European Union referendum, though there were some signs of weakness at the end of the second quarter. Companies added 172,000 jobs in the three months and the unemployment rate stayed at 4.9%.
The report showed the number of advertised positions rose 2.4% in July from a year earlier, though part time vacancies dropped 58%.
German Warning
An ally of German Chancellor Angela Merkel said the UK will have to pay into the European Union’s budget if it wants the single market’s advantages, diminishing Britain’s prospects for a low-cost solution after its vote to exit the EU.
Juergen Hardt, a lawmaker who speaks on foreign policy matters for Merkel’s Christian Democrat-led parliamentary caucus, cited the case of Norway, a non-EU nation that contributes to the bloc’s finances in return for market access. The issue wasn’t adequately addressed in the UK’s campaign leading up to the Brexit referendum in June, he said.
“If someone wants to benefit from the European Union single-market structures, he also has to contribute to the cost of that operation,” Hardt said in an interview in Berlin. “In Britain, before the referendum, nobody talked about that fact.”
Hardt’s warning is a renewed reminder to Prime Minister Theresa May that Germany won’t let the UK can’t pick and choose the EU’s benefits once her government triggers the exit clause and talks on a new relationship begin. He also said Britain shouldn’t expect special treatment on a halt to immigration.
“There’s no possibility to, for example, abridge the free movement of employees but to keep all the other freedoms” that EU members share within the single market, Hardt, 53, said on Monday.
Banks Change Plans
The Brexit vote is prompting banking startups to rely even more on funding from deposits than from wholesale markets to gain regulatory approval. Banks seeking bank licenses in Britain are reworking their business plans.
That's in contrast to larger banks such as HSBC Holdings and Royal Bank of Scotland Group, which are discouraging some depositors as low and negative interest rates squeeze profitability.
Record Investment
A record number of overseas investments were made in the UK in the 2015-16 financial year, buoyed by a surge from emerging markets, making the country Europe’s most popular for external financiers.
Total projects funded by foreign direct investment rose 11% to 2,213, the Department for International Trade said in a statement Tuesday. FDI created or protected 116,000 jobs including in life sciences, financial and professional services, and energy and infrastructure.
“We’ve broadened our reach with emerging markets across the world to cement our position as the number one destination in Europe for investment,’’ said International Trade Secretary Liam Fox, who called the figures a “continued vote of confidence’’ in the UK.
Investors came from 79 countries, a record for one year. Projects funded from Latin America more than tripled, up 240%, and East European investment increased 131%.
The US remained the UK’s largest source of outside financing, with 570 projects, followed by China, which accounted for 156, and India with 140.
