"The negative headlines around the jobs market could create a positive response from the Bank of England, one that could benefit borrowers"

Fewer jobs, fewer vacancies and lower wage growth were sadly predictable following the big rise in employer taxes announced last October now feeding through. It highlights the difficult position the Government are in, and all eyes are on the spending review tomorrow. The market will be asking if it is a serious exercise or whether we need to expect more tax rises in the Budget. The Bank of England may be under pressure to cut interest rates, but it'll only work if companies want to invest.

It will take a few more months of this decline before the Bank of England will look to take any action, and whilst rate cuts may help the real root of the problem is the recent huge NI cost increase and higher company taxes, making it hard for all sizes of business to function let alone grow. Base Rate cuts on their own will not reverse the uncomfortable position business owners are in.

The softening in the labour market from rising unemployment, falling vacancies and moderating wage growth, strengthens the case for a Bank of England rate cut in August. But it’s not a done deal. The Bank will still be closely watching inflation data and service sector performance before pulling the trigger. As for lenders, we may see some early movement, particularly if markets start pricing in the August cut with confidence. But swap rates have been volatile, so we’re more likely to see cautious tweaks based on market competition and managing service levels rather than widespread mortgage rate drops due to cheaper commercial borrowing being available.