UK businesses demonstrate signs of stagnation because hiring has dramatically decreased while inflationary pressures have returned to the market. The S&P Global survey revealed private-sector activity growth decreased in July while employment declined because of the payroll tax increases implemented by Chancellor Rachel Reeves. The June inflation rate reached 3.6% which exceeded the Bank of England’s 2% target and made its policy decisions more challenging. Market analysts predict a small interest rate reduction for August yet economic experts caution against expecting strong rate reduction measures. The combination of tax and wage pressures forces policymakers to maintain a challenging equilibrium between economic growth support and inflation control.
