Painful words for the head of the Bank of England. Employees should not ask for large wage increases

Bank of England President Andrew Bailey’s statement sparked an uproar in the UK. I mentioned that Despite the rising cost of living and declining living standards in the country, which are expected to continue until next yearWorkers should not demand large wage increases.

In an interview with the BBC, he warned that this could lead to increased inflation. He noted that although it would be painful for the staff to accept itThat prices are rising faster than their wages It is necessary to have “moderation in wage increases”To prevent inflation from becoming persistent.

When asked if the Bank of England is asking workers not to demand large wage increases in this way, it replied: “Basically yes – in the sense of saying: We need to see moderation in wage growth. It hurts – I don’t want to soften this message in any way, it hurts“.

Bank of England forecast That this year in the UK After taxes – taking into account the higher cost of living – it will fall by 2%, the largest drop since 1990.

– BI admit that there will be a difficult period ahead of usBecause we are already seeing and will see a decline in real income. We will start to recover from it in 2023 and in a couple of years we expect inflation to return to a more stable position, Bailey said.

According to Bank of England estimates, Average wage growth is currently less than 5 percent. every yearIt is already below the 5.4% inflation level in December. Meanwhile, the Bank of England expects it to grow even more – in April it will peak at 7.25 per cent, and the average for the whole of 2022 will be around 6 per cent.

In addition, it will have a significant impact on the cost of living The 54% or £693 annual increase in energy prices since April, which was not matched by the £350 government subsidy announced on Thursday.

Bailey noted that rising energy costs were out of the BoE’s control, which could only “prevent things from getting worse”.

However, he noted, there are “good reasons to believe” that energy prices “They’ll start to subside, not least because it’s somewhat seasonal.”