Unions have reacted with fury to a suggestion from the Bank of England Governor that people shouldn’t ask for a big pay rise this year to offset soaring household costs.
Andrew Bailey made the comment in interviews with the BBC and Sly News in which he also warned people in the UK face a difficult year.
Asked if comments about wage bargaining meant staff should not ask for big pay hikes, he replied: “Broadly, yes - in the sense of saying: we do need to see a moderation of wage rises.
“I'm not saying 'don't give your staff a pay rise' - this is about the size of it.”
Bailey added he did not see the squeeze on household finances easing before 2023.
Unite general secretary Sharon Graham responded that workers didn’t cause inflation or the energy crisis 'so why should they pay for it'.
“Yet again workers are being asked to pay the price, this time for inflation and the energy crisis.
“Workers don’t need lectures from the Governor of the Bank of England on exercising pay restraint. Why is it that every time there is a crisis, rich men ask ordinary people to pay for it
Bailey was speaking after interest and heating bills both went up yesterday.
The energy price cap, what most people will pay for gas and electricity, rose by 54% while interest rates went up by a quarter of a percentage point to 0.5% adding to the cost of a mortgage.
"It is going to be a difficult period ahead, I readily admit, because we are already seeing, and we're going to see, a reduction in real income," Bailey said in the interviews.
"We're going to start coming out of it in 2023, and two years from now, we expect inflation back to a more stable position."
The bank expects household incomes will fall by 2% this year, which would be the largest decline since records began in 1990.
Bailey said the Bank raised interest rates to try to curb a spike in inflation, which is forecast to hit 7.25% in April before falling back.
External forces, such as the 600% jump in wholesale gas prices in 2021, were out of the Bank’s control, he said, but it had acted now to stop things from getting worse.
Eventually energy prices "will start to ease, not least because they are somewhat seasonal", he added.
-- adds union comment, detail --