Rachel Reeves has claimed the economy has a huge black hole (Image: Getty)
Rachel Reeves has again hinted that taxes will be increased in the upcoming Budget, insisting "difficult decisions" must be made.
The Chancellor, reacting to the Office for National Statistics' (ONS) labour market figures, claimed she must "fix the foundations of our economy".
Wage growth slowed to its lowest for more than two years as the rate of unemployment also surprisingly dropped, according to the ONS. It revealed that regular wage growth was 5.4 percent year on year over the three months to June.
However, this slipped from 5.7 percent in the previous three months and represented the smallest increase since the period to July 2022.
Ms Reeves added: “Today’s figures show there is more to do in supporting people into employment because if you can work, you should work.
“This will be part of my Budget later in the year where I will be making difficult decisions on spending, welfare and tax to fix the foundations of our economy so we can rebuild Britain and make every part of our country better off."
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Rachel Reeves warned of 'difficult decisions' ahead (Image: Getty)
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ONS director of economic statistics Liz McKeown said: "Basic pay growth, while remaining relatively strong, continues to slow.
"Growth in total pay slowed markedly, with last year's one-off NHS bonuses affecting the comparison."
The ONS also said the rate of unemployment was 4.2 percent over the three months to June, dropping from 4.4 percent over the previous three months.
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A consensus of economists had predicted an increase to 4.5 percent for the quarter. The statistics body said it reported a broad decrease in unemployment among surveyed Britons over 25.
The data also highlighted a "modest increase" in employment for the quarter, in another positive sign for the UK labour market.
Estimates for the number of payrolled employees in the UK increased by 14,000 between May and June 2024, said the ONS.
Ms McKeown added: "However, the medium-term picture remains somewhat subdued with the employment rate still lower than a year ago and the growth rate in the number of payrolled employees having slowed over the year."
Another decline in vacancy rates also showed continued pressure in the UK jobs market. The number of vacancies in the UK decreased by 26,000 to 884,000 for the three months to June.
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The Recruitment and Employment Confederation (REC) chief executive Neil Carberry said: “Today’s data reflects the cooling market recruiters reported in the spring - though there are clear positive signals in things such as the upswing in temporary work.
"Vacancies have now normalised towards their pre-pandemic norm and cooling pay growth justifies the Bank of England’s recent interest rate decision.
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“It is very clear where the challenge lies in our jobs market. Employment rates are still well below pre-pandemic levels and economic inactivity is way too high.
"It is essential that the new government works with businesses to address this - and makes sure its plans for workplace regulation don’t put barriers in the way of getting jobs for those who really need them.”