DAVY VIEW

Yesterday’s UK labour market data showed that the damage from COVID-19 has been remarkably light, with unemployment still at 3.9% but clearly suppressed by the success of Rishi Sunak’s job furlough scheme supporting close to 10m workers and due to end in October. Of more note was that nominal wage growth moved into negative territory, adding to disinflationary pressures and signalling that household spending will remain weak even after the re-opening of the UK economy.