Kevin Brown comments on the latest UK unemployment figures

Kevin Brown, savings specialist at Scottish Friendly, comments:

On the face of it wages are rising, but with the effects of inflation factored in you can see that Britons’ real regular pay, excluding bonuses, is shrinking and is now at its lowest level since 2011.

In the three months to April, it dropped by -2.2% and with inflation set to rise even further later this year the squeeze on incomes is likely to get worse.

Strong bonus payments mean that overall Brits’ total pay increased by 0.4% between February and April, but this figure is also falling. Most families struggling with rising living costs won’t be relying on bonuses to make ends meet and with interest rates set to rise by as much 0.5% this month they could see their outgoings spike yet again.

The good news is that unemployment continues to fall and the number of people in full-time employment has reached a record high. But there are growing concerns that if businesses begin to suffer as the economic picture worsens over the course of this year, then hiring could stall and job losses could begin to creep up.

Households looking to protect their income and offset the impact of inflation on their savings should consider looking beyond cash. Having a sum of money that is easily accessible in preparation for emergencies or rainy days is important, but for longer-term saving investments offer the potential for above-inflation returns.