Britain’s rate of wage growth is not certain to increase any time soon, despite signs of skills shortages, according to Bank of England deputy governor Ben Broadbent.
The Bank has said it does not intend to raise interest rates until there is a clear prospect of stronger wage growth, and so far the picture remains murky, Broadbent told central bankers at an annual conference in Jackson Hole, Wyoming.
Broadbent said years of low productivity and meagre pay rises since the financial crisis may have reduced British workers’ wage demands. Last week the Bank halved its forecast for wage growth this year to 1.25%, prompting some economists to push back forecasts of when interest rates will rise.
The Bank has pencilled in a recovery in wage growth to 3.25% next year, below the pre-crisis average of 4.25%.
But Broadbent said this was not certain, as it was possible “the ‘norm’ of pay growth [had] gradually adjusted to a protracted period of low productivity growth … as people have become more adapted to lower pay awards.”
via The Guardian