Is the BoE Too Optimistic on Wage Growth

Britons face a “rockier” labor market in the coming years that’s going to limit an improvement in wage growth, according to EY Item Club.

The forecasts published Monday are in contrast to the medium-term outlook presented by Mark Carney last week. While the Bank of England governor warned of a “challenging” 2017 for workers as inflation outpaces pay gains, the BOE sees a pickup from later this year, with wages growing close to 4 percent in 2019. In contrast, EY sees “negligible” real wage gains with nominal improvements of less than 3 percent right through 2020.

EY blames its gloomier outlook on a slowing economy and lower demand for workers. That will cause the first annual drop in the number of people being hired since the financial crisis, stagnating real pay growth and greater joblessness, the economic forecasting group said on Monday.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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