Cost of living crisis: Bank of England calls for wage restraint as inflation soars – business live

Bank of England: We need to see restraint on pay rises

The Bank of England is calling on workers and bosses to show ‘restraint’ on wage rises, even as the country faces its toughest squeeze in decades.

Speaking to the Today Programme, governor Andrew Bailey says the Bank wants to see “quite clear restraint” in the bargaining process.

Bailey, who is paid around half a million pounds a year, insists that the UK is not experiencing a wage-price spiral, but pressures are building.

A day after the Bank raised interest rates to 0.5%, and warned that inflation will hit 7.25% in April, Bailey said controlling wage increases is key to keeping a grip on inflation.

We are looking to see quite clear restraint in the bargaining process. Otherwise it will get out of control.

It’s not at the moment but it will do.”

I’m not saying, don’t give your staff a pay rise, Bailey insists. This is about the size of it.

But won’t wage restraint prevent companies from hiring workers, at a time when many are struggling to fill positions?

Bailey says he wants to see wage restraint across the economy.

I’m not saying nobody gets a pay rise, don’t get me wrong. But what I am saying it, we do need to see restraint in pay bargaining, otherwise it will get out of control.

Yesterday, the Bank of England warned that UK households face the worst squeeze on their disposable incomes for at least 30 years, with real post-tax labour income expected to shrink by 2% this year.