Average pay rises without bonuses fell to 7.3% in the last quarter and although still strong this has been gradually dropping. The figure was 7.2% including bonuses. Pay growth in the public sector remained high at 6.9% after a round of near inflation rises.

Neil Carberry, REC chief executive, said: ‘In the medium-term, there is a risk of inflation returning and lower growth if we don’t address the challenges raised by shortages through skills investment, a focus on productivity and a more sensible approach to immigration for work. That’s why firms want to see government adopt a people and productivity focused industrial strategy.’

After months of continual interest rate hikes and high inflation, there are nerves about the future trajectory.