https://nighthawkrottweilers.com/

Business

Wage increase surprise leads to forecasts of higher interest rates




  • By Daniel Thomas
  • Business reporter, BBC News

image source, Getty Images

UK wages have risen at the fastest rate in 20 years, barring the pandemic, raising expectations that UK interest rates will have to rise.

Regular pay excluding bonuses rose by 7.2% in the three months to April, although it still lags behind inflation – the rate at which prices rise.

The Bank of England has warned that big pay rises are contributing to Britain’s still high inflation rates.

It has raised interest rates 12 times since 2021 to try to slow inflation.

Higher interest rates may be good for savers, but increase repayment costs for millions of mortgage holders.

Lenders have raised interest rates and withdrawn hundreds of agreements, creating uncertainty for borrowers.

On Tuesday, the state’s borrowing costs – which directly affect mortgage interest rates – rose to the highest rate since last year’s mini-budget.

Samuel Tombs, UK chief economist at Pantheon Economics, said the renewed pick-up in wage growth would “add fuel” to expectations of higher interest rates.

This was because the figures “grow the impression that Britain has a unique problem of entrenched high inflation”.

Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), told Cash that basic pay is now growing at its fastest pace since current records began, apart from the period when the figures were “distorted by the pandemic”.

“However, wage increases continue to lag behind inflation.”

Did you just get a raise, or are you fighting for one? Contact.

The increase in the minimum wage had had a “significant” impact on the April wage figures, said Andrew Hunter, co-founder of job search engine Adzuna.

The minimum wage – known as the National Living Wage – rose to £10.42 an hour in April for those aged 23 and over.

“Almost two million workers in the UK saw a pay rise of almost 10% this spring,” Hunter told the BBC’s Today programme.

Workers in several industries have been on strike since last summer because wage rates are not keeping pace with inflation. But the gap is narrowing as inflation begins to fall.

The Bank of England has warned that sharp wage rises are likely to prolong Britain’s continued high rate of inflation. The cost of living rose by 8.7% in the year to April, more than four times the bank’s target of 2%.

Hunter said: “Your average worker will be happy that their wages are going up on average, but that’s not necessarily good for inflation.”

The Bank of England governor, Andrew Bailey, told the House of Lords economic committee that the latest jobs figures showed the labor market was “very tight”.

“We’ve had a drop in labor supply, which is showing signs of recovery, but very slowly, frankly,” he said.

“One of the things companies pretty much universally say to me and have said to me for a while is that they find it so difficult to recruit labor in the current market, they’re not going to release labor.”

The market rate for the UK government to borrow money over two years is now actually higher than it reached in the wake of Liz Truss’s mini-budget. It is also the highest level in a decade and a half and now clearly higher than seen for US authorities.

That this is not the same market panic as last autumn will be a small respite for many who renew their mortgages.

All of this reflects market expectations that the UK has a specific problem with stubborn and sticky inflation that will require higher interest rates for longer. Some market bets now see a half percentage point rate hike next week, with rates settling closer to 6% than 5% at the end of the year.

There is an important difference in the mini-budget’s aftermath. The movements are mainly seen in short-term interest rates. The real problem last fall was long-term 10- and 30-year bonds, which saw significant moves in yields, a result of the market’s loss of confidence in the then-government’s tax and spending plans. Current interest rates for such long-term loans are still well below that market panic.

Today’s move is more of a steady squeeze as markets come to terms with the idea of ​​the Bank of England keeping interest rates higher for longer, and above rates seen in similar economies.

Figures from the ONS also showed that:

  • UK unemployment fell slightly to 3.8% from 3.9% in the three months to April
  • The number of people who do not work due to long-term illness hit a new record of almost 2.6 million
  • The number of people in work reached a record high of 33.1 million.

The UK economy is currently struggling to grow as skyrocketing living costs and rising interest rates put pressure on households. But the labor market remains robust.

Chancellor Jeremy Hunt said: “Rising prices continue to eat into people’s paychecks – so we must stick to our plan to halve inflation this year to boost living standards.”

However, Labour’s shadow chancellor Rachel Reeves said: “Family finances are being pushed to breaking point by a further fall in real wages and a record number of people are out of work due to long-term illness.”

Tips for asking for a pay rise

1. Choose the right time – Planning a conversation in advance will give you and your boss time to prepare, and means you’re more likely to have a productive conversation.

2. Bring proof – If you’re asking for a raise, you should have plenty of evidence as to why you deserve it.

3. Be confident – When you ask your boss for more money, it helps if you’re confident and know what you’re worth.

You can read tips from career experts in full here.



Source link

Back to top button

mahjong slot

https://covecasualrestaurant.com/

sbobet

https://mascotasipasa.com/

https://americanturfgrass.com/

https://www.revivalpedia.com/

https://clubarribamidland.com/

https://fishkinggrill.com/