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Bank of England expected to cut interest rates as jobs market weakens
Several economists are predicting the Bank of England could cut interest rates as soon as December, following this morning’s weak jobs report.
And looking further ahead, the money markets are now indicating they expect 65 basis points of BoE rate cuts by the end of next year, up from 55 bps on Monday. That means two quarter-point cuts by December 2026 are fully priced in, with a third now more likely.
Suren Thiru, economics director at ICAEW (the Institute of Chartered Accountants in England and Wales), reckons the odds of a rate cut next month have risen, now that unemployment has jumped to 5% and wage growth has slowed.
“These figures suggest that the UK’s labour market is suffering from pre-Budget jitters, as businesses already weakened by April’s rise in national insurance look to cut recruitment further in anticipation of another difficult Budget.
“This weakening in wage growth is likely to accelerate over the winter as the downward pressure from an ailing economy, significant staffing costs and more job losses increasingly restrains pay awards.
“The jobs market could bear the brunt of Budget tax rises as weaker customer demand, amid a possible income tax hike and increasing costs on business, may mean higher unemployment than the Bank of England currently predicts.
“These underwhelming figures add credence to the more dovish tilt to last week’s policy decision and the current rate at which the labour market is loosening notably increases the chances of a December interest rate cut.”
Richard Carter, head of fixed interest research at Quilter Cheviot, points out that BoE governor Andrew Bailey is the ‘swing voter’ on its Monetary Policy Committee, who could be swayed into creating a majority for a cut:
“An early Christmas present could come in the form of an interest rate cut from the Bank of England following a rise in unemployment and a softening in wage growth. The monetary policy committee had a tight 5-4 split on whether to hold or cut rates at last week’s meeting, with Andrew Bailey’s deciding vote erring on the side of caution.
“Today’s figures from the Office for National Statistics show wage growth pressures, albeit still relatively high, are slowly easing. Annual growth in regular earnings excluding bonuses saw a decline to 4.6% compared to 4.7% last month, and total earnings including bonuses fell to 4.8% compared to 5%. Any further signs of easing in the next labour market print could sway a few more on the committee to cut on the 18th December.
Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, points out that problems at the Office for National Statistics do make today’s data somewhat unreliable….
“A rise in the unemployment rate to 5.0% in September, the highest level since the pandemic, and a further slowing in private sector pay growth throws the door wide open to a December rate cut – as long as the budget is as deflationary as the Chancellor hinted at last week.
“Overall, the labour market appears to still be weakening with the unemployment rate ticking up and employment falling on both the LFS and payrolls measures. Admittedly, the unemployment rate is being driven up by an erratic looking jump in unemployment on the single month figures. Even though the ONS has made improvements to the Labour Force Survey, which is where the official measures of employment statistics are derived from, it continues to be distorted by a low response rate making it less reliable than in the past.
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SoftBank’s decision to sell out of Nvidia is “a major event for markets”, says AJ Bell investment director Russ Mould.
“People are looking for clues that the tech rally is close to the top, and SoftBank’s profit-taking in the chip giant is significant.
“Investors typically sell out of positions when they believe the valuation is too rich, the growth prospects for the company are less attractive than before, or they’ve found something better to back and need cash to make that investment.
“SoftBank is an active investor and has a deal to invest billions of dollars into OpenAI, which suggests that it still sees massive opportunities to make money from the AI revolution. Selling out of Nvidia while also trimming its position in T-Mobile helps to top up the war chest for the next wave of AI-related investments.
“Nvidia has had a storming run on the markets and SoftBank might think it is prudent to cash in while the going is good.
“Nvidia’s role in an AI world is already well known, yet OpenAI’s position is still evolving, so it might simply be that SoftBank sees the latter as a better way of profiting from the tech explosion going forward, rather than sticking with yesterday’s trailblazer.
“What’s important for markets is the fact that SoftBank’s exit from Nvidia isn’t the Japanese group washing its hands completely of all things AI.”
The tech-focused Nasdaq index has dropped by 0.6% in early trading.
Marketing firm Applovin (-5,6%) are the top faller, followed by semiconductor maker Micron (-3.8%) and chip designer ARM (-3.6%).
S&P opens lower as tech shares slide
The US stock market has opened slightly lower.
The S&P 500 index dipped by 0.25% at the open, with Nvidia (-2.3%) among the fallers following SoftBank’s sale of its stake in the chipmaker (see earlier post).
Fellow tech companies Oracle (-2.5%) and Dell (-2.4%) are leading the fallers.
As well as concerns over technology valuations, investors will have noted today’s warning that US companies cut jobs at the end of last month (see earlier post).
Nvidia shares fall after SoftBank sells stake
Shares in chip giant Nvidia have fallen by over 2% at the start of trading in New York, after one of its major shareholders revealed it had sold its stake.
Japan’s SoftBank disclosed this morning that it had sold its entire shareholding in Nvidia in October, for $5.83bn.
Analysts said SoftBank, a powerful tech investor, appears to be raising money to fund other investments in artificial intelligence groups such as OpenAI.
But… the sale of the stake in Nvidia, which has been very profitable for SoftBank, could fuel concerns that AI valuations have risen too high.
Nvidia’s stock has dropped by 2.3%, to $194.70, but is still up over 45% so far this year (and around 1,300% over the last five years!).
SoftBank’s chief financial officer Yoshimitsu Goto told investors that the salw as part of the firm’s strategy for “asset monetization,” explaining:
“We want to provide a lot of investment opportunities for investors, while we can still maintain financial strength.”
“So through those options and tools we make sure that we are ready for funding in a very safe manner.
The jump in the UK unemploymen rate is a blow to the Government’s tax take.
Robert Salter, a director at audit, tax and business advisory firm Blick Rothenberg, explains:
“4.2% of people were unemployed when the Government came to power in 2024, and today’s figures from the Office of National Statistics (ONS) reveal it has increased to 5%. Each additional individual who is unemployed represents both a reduction in the Government’s tax take and an increase in cost of providing social support.”
“There has been a lot of speculation and commentary on the size of the UK’s ‘fiscal black hole’ in recent weeks and the increase in the unemployment rate will only compound the challenges faced by the Chancellor, Rachel Reeves as the Budget looms ever closer.”
ADP: US companies shed jobs last month
Just in: We also have a weak-looking jobs report from the US.
Not an official report (the shutdown isn’t over yet!). But private payroll operator ADP has crunched its latest data, and found that in the four weeks to 25 October, private employers shed an average of 11,250 jobs a week.
That suggests the labor market struggled to produce jobs consistently during the second half of the month, ADP say.
This implies a weak jobs market – which might spur the US Federal Reserve into cutting US interest rates.
It’s also surprising, as ADP reported last week that private sector employment increased by 42,000 jobs in October.
Unless I'm being a moron this makes no sense - the weekly survey suggests that the economy LOST 45k jobs in Oct, the monthly survey suggests the economy GAINED 42k jobs in Oct... 🤷♂️ https://t.co/h6ayjh3u3s
— Michael Brown (@MrMBrown) November 11, 2025This apparent contradiction could be caused by a sharp deterioration in the jobs market towards the end of October (after the monthly data was collected).
The FTSE 100 has slipped back from this morning’s record high, as investors anticipate a weak start to trading in New York.
Wall Street futures indicate the S&P 500 share index could drop by 0.25%, while the Nasdaq tech index is on track for a 0.4% drop.
Concerns around elevated technology valuations appear to have resurfaced, while markets watch whether the longest government shutdown in US history is ending.
Vodafone shares at two-year high after dividend boost
Mark Sweney
Vodafone has increased its dividend for the first time in eight years and upgraded its profit guidance, sending shares in the telecoms operator to a more than two-year high.
The company, which completed a £16.5bn merger of its UK operations with rival Three earlier this year, was boosted by a return to revenue growth in its biggest market, Germany, which has been struggling for the last two years.
Shares rose about 6% on Tuesday, making Vodafone the biggest riser in the FTSE 100 (lifting it to that new record), as the company said it would increase its dividend for the first time since 2018.
Margherita Della Valle, who has been carrying out a major transformation programme since being appointed as the company’s first female chief executive two years ago, said that Vodafone is looking to move towards a “progressive dividend policy” to increase returns to shareholders annually.
The group slashed its dividend by about 40% in May 2019 after the cost of buying mobile 5G spectrum caused its debt to balloon.
“It’s been a long time since this happened at Vodafone and we are pleased that we are able to share this with our investors,” Della Valle said.
The new dividend policy will deliver an expected increase of 2.5% in the year to the end of March.
Vodafone said that it now expects to deliver the upper range of guidance for full year earnings of between €11.3bn and €11.6bn, and adjusted free cash flow of €2.4bn to €2.6bn.
In Germany, where Vodafone has lost half of its TV customers between July 2024 and March this year due to a law change that gave customers living in housing association properties the right to choose their own TV provider, the company added 90,000 new customers in the first half of its current financial year.
“The group had quite simply been fighting fires on too many fronts while dealing with an increasingly onerous debt burden, leading to the need for a significant transformation,” said Richard Hunter, head of markets at Interactive Investor. “What is now emerging is a smaller and less geographically diverse, but more focused operation.”
Vodafone UK is currently embroiled in a £78m legal claim with more than 60 of its franchise operators.
Claimants have accused the company of “unjustly enriching” itself by cutting commission rates paid to franchisees which many have said have led to them running up huge personal debts and fearing for their livelihoods or homes.
Vodafone has been offering settlements to some former franchise partners who are not involved in the high court claim.
“As you know we have touched on this before,” said Della Valle, in response to a question about the status of the legal action and settlement offers.
“This is a specific commercial dispute between Vodafone UK. Some of its franchisees are going through a legal process so I cannot comment further.”
A spokesperson for Vodafone UK said: “Vodafone continues to defend all allegations against them in this commercial dispute.”
Kate Nicholls, chair of UKHospitality, has firmly blamed Rachel Reeves’s budget a year ago for the downturn in the jobs market.
Nicholls warns that hospitality firms are businesses are reducing hours, cancelling investment, raising prices, or even closing down, as well as cutting jobs.
“Thirteen months of falling employment and 170,000 fewer people on payroll is a shocking indictment of the damage caused by last year’s Budget.
“Hospitality has borne the brunt of these changes, with more than half of all job losses coming from our sector. If the Government wants to get more people back into work and revitalise high streets, it needs hospitality firing on all cylinders, but right now we’re being taxed out.
“We urgently need action at the upcoming Budget and are calling on the Government to lower business rates, fix NICs and cut VAT. These measures will help reverse some of the damage, protect jobs and allow hospitality to grow and prosper again.”
Disabled people are bearing the brunt of the weakening UK job market, charity Scope is warning today.
Scope, the disability equality charity, has analysed today’s UK labour market report and spotted that the number of disabled people in employment fell by 349,000 between July-September 2024 and July-September 2025.
This means the Disability Employment Gap (DEG) (comparative employment rates of disabled and non-disabled people) rose to 30.1% points in the third quarter of 2025, up from 27.5% points a year earlier.
They also report that disabled people are more than twice as likely to be unemployed as non-disabled people:
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Employment rates for disabled people dropped to 52.3% (compared to 54.5% in the third quarter of 2024) while for non-disabled individuals improved, reaching 82.5% compared to 81.9% in the third quarter of 2024.
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Unemployment among disabled individuals has been rising since the first quarter of 2024. And it continued to do so reaching 9.1% for disabled people in the third quarter of this year (compared to 6.7% same quarter in 2024).
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Inactivity rates, after stability for few months, began to increase among disabled people from 41.6% in July-September 2024 to 42.5% in same quarter in 2025. This is not the case for non-disabled people, for which inactivity rates have continued to fall.
James Taylor, executive director of strategy at Scope, says:
“It’s alarming that disabled people are bearing the brunt of the weakening job market.
It suggests disabled people are facing a double whammy of being hit hardest by job cuts, and not getting the opportunities they should.
Huge numbers of disabled people want to work but are denied the opportunity, Taylor adds:
“Scope’s employment advisers regularly work with disabled people who have been pushed out of jobs by employers’ negative attitudes or rigid working practices.
“With unemployment rising and hiring sluggish, the government needs to invest in supporting disabled people to get into and stay in work.”
Bank of England policymaker Megan Greene has indicated that this morning’s weak UK unemployment data won’t prompt her to vote for interest rate cuts next month.
Greene is one of the more hawkish members of the Bank’s monetary policy committee, and one of the five who voted to leave rates unchanged last week.
Speaking at a UBS conference in London, Greene said she believed the labour market is past the worst and warned that firms are predicting more hefty wage increases, Bloomberg reports.
Greene explaine:
“If you look at some of the higher frequency data, it suggests that maybe the adjustment in the labor market is mostly behind us now. It’s possible that the worst is behind us, but it’s certainly something I’m looking at.”
She did warn, though, that the rise in the unemployment rate to 5% was a blow for the economy, saying:
“Unemployment does have a five handle on it now, for the first time in a really long time. And that’s not great.”
