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Bank of England governor Andrew Bailey has suggested that workers should not ask for big pay rises as it battles surging inflation.
The Bank has acted to combat accelerating price growth by hiking interest rates to 0.5%.
But if employees ask for wage increases to match the cost of living its task could be made harder.
That is because of the risk that employers would then pass on those higher wage costs to consumers in the form of prices, creating an inflation spiral.
In an interview after the Bank’s interest rate decision, Mr Bailey told Sky News that the Bank believed that some of the price pressures driving inflation would “correct”.
But he added: “What we have to do is ensure that in the meantime that there isn’t more inflation pressure domestically.
“That would come for instance from things like wage bargaining.”
In a separate interview, asked if the Bank was effectively asking workers not to demand big pay rises, he told the BBC: “Broadly, yes – in the sense of saying: we do need to see a moderation of wage rises. That’s painful – I don’t want to in any sense sugar that message, it is painful.”
Mr Bailey told the BBC’s Today programme on Friday: “I’m not saying ‘don’t give your staff a pay rise’ – this is about the size of it.
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‘We face a real cost of living crunch’
The message comes at a time when wage growth is already starting to be outstripped by inflation, meaning a real terms pay cut for workers.
That squeeze looks like getting even worse over coming months as energy bills for millions of households go up by a…
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Source : skynews
