The number of people being placed in permanent jobs by recruitment agencies fell at its fastest rate for more than five years in June – yet further evidence of the severity of the slowdown in the UK economy.
According to the latest KPMG/ REC monthly employment survey, to be published on Wednesday, the number of people placed in jobs fell for the fourth month out of five in June, and at its fastest rate since May 2003.
The news will pile yet more pressure on the Bank of England's Monetary Policy Committee to keep interest rates on hold, when it begins its two-day monthly meeting on Wednesday. Although inflation is already more than a percentage point higher than the Government's target of 2 per cent, and is expected to rise further over the coming months, much of the rec-ent economic data has suggested that the UK economy is already beginning to slow quite rapidly, and that any increase in base rates could help tip the UK towards recession.
Economists also argue that much of the current inflation is accounted for by rising oil and food prices, which will not be contained by raising UK interest rates.
The Bank has also been under pressure in some quarters to lower rates this week, to help ease the pain from the ongoing credit crunch. But such a move would risk further fuelling inflation.
The consensus among economists is that the Bank is now almost certain to keep rates on hold this month. "The overall impression that emerges is that the Bank of England is currently in no hurry to change interest rates, given the current major uncertainties surrounding both the growth and inflation outlooks," said Howard Archer, the chief economist for Global Insight.Reuse content