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UK workers must accept lower pay deals to help beat inflation, says Bank ratesetter
(www.theguardian.com)
this post was submitted on 08 Feb 2024
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UK Politics
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This is the best summary I could come up with:
Victory in the war on inflation will require British workers to accept lower pay deals and companies to rein in their profits, a senior Bank of England policymaker has said.
In a speech almost a week after she and fellow policymakers kept interest rates unchanged at the highest levels since the 2008 financial crisis, she said inflation in the service sector of the economy remained too high to meet the Bank’s target.
Financial markets anticipate that falling inflation and near-stagnant economic growth should open the door to the Bank cutting interest rates by as much as one percentage point this year, from the current level of 5.25%.
The Bank’s policymakers are, however, concerned that underlying inflationary pressures from the domestic economy could drive inflation closer to 3% by the end of the year, highlighting risks from rising service sector prices and resilient wage increases.
Speaking at an event for the UK Women in Economics Network, Breeden said that indicators of annual pay growth remained in the 6-7% range, significantly higher than recorded in recent years.
The monthly survey, which is closely watched by the Bank for early warning signs from the economy, found permanent salary inflation had dropped to a 34-month low, highlighting “ongoing uncertainty around the economic outlook”.
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