Andrew Bailey: There is ‘high level of uncertainty in economy’
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The governor’s remarks come just weeks after he was lambasted for suggesting people shouldn’t ask for pay rises in the cost of living crisis. Mr Bailey was trying to justify his call for pay restraint to curb inflation during a Treasury committee of MPs, when he fumbled over his sky-high salary.
In a toe-curling exchange, Mr Bailey was asked if he knew the median salary in the country. After he suggested it was in the “upper £20,000 range”, Labour MP Dame Angela Eagle told him it was £31,000.
He also struggled with the average salary for a care worker, before being pushed on his own pay. Conceding it is “substantially higher”, he said: “It’s somewhere over £500,000. I can’t tell you exactly what it was, I don’t carry that around in my head.”
Dame Angela told him it was £575,538 including pension contributions.
She argued that workers had suffered the longest pay squeeze in 200 years, and asked when they could catch up if not now.
Mr Bailey replied: “I am not saying people should not take pay rises. I did make the point that it was in the context of large pay rises.”
He also stressed that restraint is needed from businesses on price rises. Referring to the soaring cost of living, he said: “We have been hit by a very large shock. There’s nothing that we can do to offset that.
“The real thing that worries me here is that it is those with least bargaining power in the labour market that lose out in this situation.
“Because you have got this shock to national income, I am afraid it is going to hit us as a nation. And in a labour market – which of course operates as a market – it is those who have got the least bargaining power that get the worst outcomes.”
There have been reports of workers in some sectors demanding double-digit pay rises, sparking alarm about the potential for an inflationary spiral.
But Downing Street has refused to back Mr Bailey’s plea for wage restraint, saying it is a matter between firms and workers.
Mr Bailey said that the path for inflation was very “uncertain” – and cautioned that more interest rate rises might be needed if it goes higher than the Bank fears.
The 5.5 percent Consumer Price Index (CPI) rate for January was the highest in nearly 30 years, and the Bank expects it to peak at around 7.25 percent in April.
That is when a 54 percent rise in the cap on household energy bills comes into effect. People face a further big squeeze as the Government brings in a £12billion National Insurance rise the same month while also starting to charge for Covid tests.
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