BUSINESS LIVE: Wage growth slows; Vodafone agrees Microsoft AI deal; Ocado baskets shrink

Vodafone has agreed a ten-year partnership with Microsoft to bring generative AI, digital, enterprise and cloud services to more than 300 million businesses and consumers across its European and African markets.

The British company will invest $1.5billion in customer-focused AI developed with Microsoft’s Azure OpenAI and Copilot technologies, it said, and will replace physical data centres with cheaper and scalable Azure cloud services.

Microsoft will in turn become an equity investor in Vodafone’s managed IoT (Internet of Things) platform when it is spun out as a standalone business by April 2024, and help scale Vodafone’s mobile financial platform in Africa.

Vodafone boss Margherita Della Valle said:

‘Today, Vodafone has made a bold commitment to the digital future of Europe and Africa. This unique strategic partnership with Microsoft will accelerate the digital transformation of our business customers, particularly small and medium-sized companies, and step up the quality of customer experience for consumers.’

Alice Haine, personal finance analyst at Bestinvest:

‘The UK jobs market continued to show signs of softening at the end of last year with the estimated number of payrolled employees dropping by 24,000 in December and vacancies falling by 49,000 on the quarter to December to 934,000 – the 18th consecutive period of decline – as employers remained cautious about hiring amid uncertain economic conditions.

‘The cooling jobs market is feeding through into wage growth with the increase in regular pay, excluding bonuses, easing to 6.6% on the year in the three months to November.

‘Annual growth in average total pay, which includes bonuses, also dipped over the same period to 6.5%. In real terms, real salaries grew 1.4% and total pay 1.3% once inflation is factored in – meaning that incomes are growing faster than price rises and stretching further than they did a year ago.

‘The hope is that real pay growth will remain positive in 2024 because inflation is expected to ease further over the course of the year.

‘While some forecasters expect inflation to drop rapidly in the first quarter amid lower energy prices, such optimism may be tempered by the growing tensions in the Red Sea and wider Middle East – a reminder that global price pressures are still very much with us and the risk of change is always a factor.’

Richard Carter, head of fixed interest research at Quilter Cheviot:

‘The external market is looking for signs that the labour market is loosening as it will show that monetary policy is working and inflation will continue to fall and stabilise.

‘However, keep rates too high for too long and the Bank might overshoot its aim and cause more pain than necessary in the labour market.

‘So far though, in October to December 2023, the estimated number of vacancies in the UK fell by 49,000 on the quarter to 934,000.

The estimate of payrolled employees in the UK for December 2023 decreased by 24,000 on the revised November 2023 figure to 30.2 million.

‘This may be as a result of a change in the method of data collection but while there is now certainly more optimism in the air in respect to the UK’s economic future, businesses are still being battered by the cost of living storm.

‘This rate may well jump up if the Bank does indeed keep rates higher for longer.’

Wage growth excluding bonuses slowed to 6.6 per cent in November, down from 7.2 per cent in October, fresh data from the Office for National Statistics shows.

Easing wage growth will encourage market confidence of looming Bank of England interest rate cuts.