Home NEWS Business Carney’s deputy fears pay is not going to pick up next year 

Carney’s deputy fears pay is not going to pick up next year 

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Britain may be stuck in a cycle of low wage rises and pessimism on pay, Bank of England deputy Governor Sir Jon Cunliffe fears.

He voted against an interest rate rise this month because he wants to see pay growth really start to pick up – a sign that inflationary pressures are rising – before taking any steps to rein in inflation.

Unemployment is at 4.2pc, its lowest level in 42 years, which would normally push wages up rapidly. But instead pay is rising at the same pace as it was in 2011 when unemployment was twice as high, indicating that the traditional relationship between jobs and pay may have broken down, Sir Jon told the Oxford Economics Society.

“Some of the relationships between economic variables that we depended on in the past appear to have gone on a longish leave of absence, but we are not sure why, or whether this is a temporary or more persistent departure,” he said.

“Against that background – and although it makes forward-looking monetary policy more difficult – I tend to put more weight on the evidence we can or cannot see in the data, and a little less on the un-observables and on how we think the economy works.”

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