UK Inflation Expected to Fall, Unemployment Measure Changed, Business Pessimism Rises

UK inflation is expected to fall to match the rest of the world, driven by a drop in energy bills. The Bank of England predicts a sharp decline in the inflation rate to below 5% in October, helping bridge the gap between the UK and the US and the eurozone. However, the accuracy and comparability of the new unemployment measure in Britain is questioned, complicating policy decisions and interest rate hikes. UK businesses are becoming more pessimistic, leading to hiring freezes and staff cuts. Wage growth in the UK has cooled, easing pressure on the Bank of England to hold interest rates. The Bank of England Governor highlighted the impact of labor-market dropouts on growth and called for supply-side reforms.