Rising unemployment could affect budget, interest rates, pay and more
There are significant implications from the latest unemployment figures showing a rise from 4.8% in August to 5.0% in September, not least for the 1.8 million people it directly affects.Rachel Reeves will be mulling over how to avoid depressing the economy and putting even more people out of work while raising tens of billions of pounds in extra tax in her upcoming budget.
So far this year, the chancellor has found a way to talk about the need for growth without being much concerned for the swelling number of unemployed people.Businesses have complained about the rising costs of employment but the jobless rate has climbed steadily and mostly under the radar.This situation is unlikely to continue if the budget on 26 November weakens the incentives to employ people even more than April’s rise in national insurance contributions, announced in last year’s budget.A further chunky rise in the minimum wage next April, which is expected to be announced in the budget, is another factor that could translate into fewer jobs if the chancellor isn’t careful.Another indication of the weakening picture was a fall in average wage increases to 4.
8% (including bonuses) in September, from 5% in August, coupled with a flash estimate for October indicating that wage growth could slow to as little as 3,1%,The Bank of England has watched the labour market throughout this year, and while it has acknowledged rising unemployment, the message has been clear that more jobs need to be lost before the central bank makes another move to cut interest rates,Threadneedle Street policymakers meet next month to judge the health of the economy and what the cost of borrowing should be,Most analysts say the message from the labour market is clear: interest rates need to be cut.
Until last week, financial markets were betting that the next rate reduction would be delayed until February 2026.A cut in December now looks nailed on.If the central bank is still unclear about how to act, the currency markets sent a further message.The pound fell against the dollar on Tuesday morning, indicating that traders believe a rate cut is coming and the demand for sterling will fall.There were also implications for public sector workers, whose pay continues to outstrip colleagues in the private sector.
The difference between 6.8% pay growth for state employees, including bonuses, and 4.4% in the private sector is likely to feature more prominently in the public debate on wages, especially if public sector workers consider strike action a reasonable course in national disputes.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionReform UK is riding high in the polls and its deputy leader, Richard Tice, is keen to point out the disparity.The latest figures will help his cause.
For unemployed people, there should be an upside from getting the budget out of the way and a further cut in interest rates from 4% to 3.75% in December.The economy should begin to expand again month on month and jobs should be created.Maybe that will happen.But the message from the last year is that employers care less about retaining staff than they do about maintaining profit margins.
There was a time in the not too distant past when labour hoarding was a feature of the jobs market.It meant employers hung on to workers in the bad times, fearing that they might not be able to re-recruit them if they took a short-term decision to sack them.This no longer seems to be uppermost in employers’ minds.Whether it is the use of artificial intelligence or just a more gloomy outlook in some sectors – such as the car industry – workers are being let go without much care for the business implications in a month or year when they might be needed again.
Datacenters meet resistance over environmental concerns as AI boom spreads in Latin America
This Q&A originally appeared as part of The Guardian’s TechScape newsletter. Sign up for this weekly newsletter here.The datacenters that power the artificial intelligence boom are beyond enormous. Their financials, their physical scale, and the amount of information contained within are so massive that the idea of stopping their construction can seem like opposing an avalanche in progress.Despite the scale and momentum of the explosion of datacenters, resistance is mounting in the United States, in the United Kingdom, and in Latin America, where datacenters have been built in some of the world’s driest areas
Can OpenAI keep pace with industry’s soaring costs?
It is the $1.4tn (£1.1tn) question. How can a loss-making startup such as OpenAI afford such a staggering spending commitment?Answer that positively and it will go a long way to easing investor concerns over bubble warnings in the artificial intelligence boom, from lofty tech company valuations to a mooted $3tn global spend on datacentres.The company behind ChatGPT needs a vast amount of computing power – or compute, in tech jargon – to train its models, produce their responses and build even more powerful systems in the future
Tech giants vow to defend users in US as spyware companies make inroads with Trump administration
Apple and WhatsApp have vowed to keep warning users if their mobile phones are targeted by governments using hacking software against them, including in the US, as two spyware makers seek to make inroads with the Trump administration.The two technology giants made their statements in response to queries from the Guardian as the two cyberweapons makers – both founded in Israel and now owned by American investors – are aggressively pursuing access to the US market.Paragon Solutions, which makes a spyware called Graphite, already cemented a deal with the Trump administration in September to give US immigration agents access to one of the world’s most sophisticated hacking tools, after the Department of Homeland lifted a freeze on a $2m contract with ICE (Immigration and Customs Enforcement).Paragon did not respond to requests for comment.Another company, NSO Group, which was accused by the Biden administration in 2021 of engaging in business that was “contrary to the national security or foreign policy interests of the US”, announced this weekend that David Friedman, the US ambassador to Israel during Donald Trump’s first term, had agreed to become executive chairman of the holding company that owns NSO
Elon Musk makes himself far-right fixture after White House departure
The Tesla CEO once hinted he was done with politics – but he’s been leaning further into the international far rightWhen the far-right activist Tommy Robinson emerged from a London courtroom this week after a judge cleared him of a terrorism charge, he gave thanks to the man he said had bankrolled his defense.“Elon Musk, I’m forever grateful. If you didn’t step in and fund my legal fight I’d probably be in jail,” Robinson said. “Thank you, Elon.”In the period immediately after Musk’s messy departure from the White House, the Tesla CEO repeatedly suggested that he was done with politics
ChatGPT accused of acting as ‘suicide coach’ in series of US lawsuits
ChatGPT has been accused of acting as a “suicide coach” in a series of lawsuits filed this week in California alleging that interactions with the chatbot led to severe mental breakdowns and several deaths.The seven lawsuits include allegations of wrongful death, assisted suicide, involuntary manslaughter, negligence and product liability.Each of the seven plaintiffs initially used ChatGPT for “general help with schoolwork, research, writing, recipes, work, or spiritual guidance”, according to a joint statement from the Social Media Victims Law Center and Tech Justice Law Project, which filed the lawsuits in California on Thursday.Over time, however, the chatbot “evolved into a psychologically manipulative presence, positioning itself as a confidant and emotional support”, the groups said.“Rather than guiding people toward professional help when they needed it ChatGPT reinforced harmful delusions, and, in some cases, acted as a ‘suicide coach’
‘Musk is Tesla and Tesla is Musk’ – why investors are happy to pay him $1tn
For all the headlines about an on-off relationship with Donald Trump, baiting liberals and erratic behaviour, Tesla shareholders are loath to part with Elon Musk.Investors in the electric vehicle maker voted on Thursday to put the world’s richest person on the path to become the world’s first trillionaire, despite the controversy that is now seemingly intrinsic to his public profile.Shareholders approved the $1tn compensation plan, which could yield the largest corporate payout in history if he meets a series of tough-looking goals, not least pushing Tesla from its current market value of $1.4tn to $8.5tn (£1
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