The FTSE100 rose past 9,000 for the first time last week, driven by robust gains in mining, defence, banking and pharmaceuticals. This is undoubtedly good news for investors but as the months roll by, the impacts of the government’s anti-employment measures – increasing minimum wages, higher employer National Insurance, and the Employment Rights Bill – become clearer and clearer.
Unemployment ticked up to 4.7% in May, continuing a trend that has seen the figure rising steadily since mid-2022 when it reached a near-50-year low of 3.6%, whilst job vacancy rates – a key driver of employment demand and wage bargaining power for workers – declined to one of the lowest levels seen in a decade if we exclude pandemic-related swings.
Whilst a cooling labour market should help moderate domestic inflationary pressures and allow the Bank of England to continue along their path of interest rate cuts, it’s hardly a situation that makes me jump for joy and there is additional evidence that all is not well, with the number of UK listed companies issuing profit warnings in the second quarter of the year rising by 20% according to research from EY. It probably won’t come as any surprise that government policy changes and geopolitical uncertainties were cited as a leading factor in the majority of these.
Fundraisings from initial public offerings on the UK stock market have also tumbled, with the five listings in the first half of the year raising a meagre £160m according to data from Dealogic, a figure even below levels seen during 2009 which I will remind you was in the immediate aftermath of the financial crisis.
Something needs to change of course, but I’m not sure the news that plans to launch a 24-hour trading platform to encourage overseas investors and younger traders to buy British shares is quite going to cut it.
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