Closing post
Time for a recap:
Hopes that UK interest rates could be cut before July’s election are fading, after UK real wages grew at their fastest pace since 2021.
The money markets indicate there’s only a 10% chance that the Bank of England lowers borrowing costs next week.
Rate cuts are unlikely after the latest labour market data showed a pick-up in real wages, while nominal earnings rose at the same pace as a month ago.
Pay held up despite the number of people unemployed in the UK rising by 138,000 in the three months to April amid growing signs of a weaker jobs market.
In the last set of labour market figures before the general election, the Office for National Statistics said employment and job vacancies were down and joblessness had increased.
Economists warned that the UK workforce was sicker and poorer than at the start of the parliament, after the number of people off work with long-term sickness hit a new high.
Sir Keir Starmer said he was confident that interest rates would fall under a Labour government.
Elsewhere, anxiety over political instability in France has hit the financial markets again today.
Moody’s warned that the French snap parliamentary elections are negative for the country’s credit rating, adding:
“Potential political instability is a credit risk given the challenging fiscal picture the next government will inherit.”
French bonds have weakened again today, while European stock markets are on track for their biggest one-day drop in two months.
And in other news…
French bank shares are having another poor day, amid the worries over the political outlook for the EU’s second largest economy.
Credit Agricole are down 4%, while Société Générale have lost 4.15% and BHP Paribas is off 3.3%.
Moody’s warning that France’s snap parliamentary elections are a “credit negative” event (see 9.27am) has refocused attention on the prospect of the far-right National Rally party potentially becoming the largest party.
