"Unrealistic" - Bank of England Predicts 3% Pay Rise
- Wage growth predicted to overtake inflation this year
- Wages predicted to rise by 3.1%
- Would be the biggest rise since 2008 financial crisis
- People are sceptical about getting a pay rise
The Bank of England has predicted that wage growth with outpace inflation this year, and will go up by 3.1%.
Private sector companies are expected to raise the average pay by 3.1% in 2018, according to agents at the Bank.
This includes the rise in minimum wage which will come into effect in April.
Public sector workers pay will still be capped at an average of 1%, the predicted rise is only for the private sector.
This would be the highest rise in private sector pay in a decade, having last been higher in 2008 at around 3.5%, before the financial crisis.
This increase could mean that British wages will finally be able to outstrip inflation, which has been pushing prices up at an average of 3%.
The Bank of England said in its’ latest inflation report last week that it expects the Consumer Prices Index, CPI, to fall back over the next three years, but remain above the 2% target in the final two years of the forecast.
This comes after figures suggest that Brits are more confident in their household finances this year, and a rise in wages would boost this further.
However, members of the Latest Deals community aren’t convinced that they’ll be seeing any increases in wages.
One member, Alan, said, “I think they are living in cloud cuckoo land! With the uncertainty around at present, who in their right mind is going to go round giving out pay rises?”
Another member, Samantha, said she would be getting a pay rise, but not quite as high as the Bank of England has predicted, “I’m only getting a 1% pay rise, it’ll work out at an extra £5 a month, it’ll barely make a difference!”
Inflation is still predicted to be high this year, so without wage growth, Brits will continue to struggle.
The main cause of inflation pressures have come from the Brexit-hit pound, which has driven the cost of imports up, and put a squeeze on families.
Conditions for British workers should also improve this year, as the Government announced reforms to holiday and sick pay.
This year’s predicted increase in wages is expected to be vary across industry.
Workers in consumer services, such as hotels, hospitality, and pubs, are expected to see an average pay rise of 3.9%, as more companies start to offer the National Living Wage.
Are you expecting a pay rise this year, or do you think the Bank is being over optimistic? Let us know in the comments