Kevin Brown, savings specialist at Scottish Friendly, comments on the labour market

“This is a double-edged sword for UK households. On the one hand, it means the average family has a little bit more money in their pockets, which will provide some welcome help with rising household bills. In particular, the energy price cap is set to increase in April, with knock-on effects for living costs.

“However, it may make it more difficult for the Monetary Policy Committee to cut interest rates, meaning mortgage rates are likely to stay higher for longer. This is the largest part of the household budget for many, and may dampen the effect of rising wages.

“It is also worth noting that employment data is always backward-looking. The impact of the October budget and rise in National Insurance is not yet reflected in these figures and may have an impact over the next few months. The mood music from businesses has become notably more pessimistic.

“A financial cushion remains the best way to build resilience into your day to day finances. Having three to six months-worth of expenses set aside for a rainy day is still important, even if your finances are looking a little rosier than they were this time last year.”