Premier's Hudson: Labour market tightness is starting to bite

Companies with low-skilled labour force could struggle

In October, both Merlin Entertainments and Royal Mail cautioned they were experiencing high-cost pressures as a consequence of tighter labour markets.

In other words, both are suggesting they are having to pay higher wages in order to attract staff. The share prices of both companies have suffered as a consequence and we suspect they will not be the last. Wage growth has been largely stagnant post the Great Financial Crisis (GFC), often baffling economists, but in the latest labour market report by the Office of National Statistics (ONS), nominal pay increased by 3.1%, the highest level since December 2008. Perhaps we should not be so surprised. The rate of unemployment and economically inactive people in the UK is the lowest it has...