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UK workers face their biggest Christmas wage cut in a decade as wages fail to keep up with rising prices in shops, unions warn today.
The Trade Union Congress (TUC) warned that wages were lagging behind inflation, creating a cost-of-living storm.
He estimates that in the last quarter of this year, wage growth (+ 0.8%) will increase at only half the speed of inflation (+ 1.6%).
This means the biggest drop in real wages since 2012 and the second worst since comparable records began in 2000.
Families are affected by soaring energy costs and rising food bills, as manufacturers pass their increased costs on to customers. And with the economy growing barely in October, companies may struggle to raise wages even as they scramble to attract workers.
YOU KNOW general secretary Frances O’Grady urges the government to step in and work with unions to increase wages across the economy:
âPeople should be able to look forward to Christmas without having to worry about how they’re going to pay for it.
âMillions of people face a cost of living storm as bills soar and real wages drop. After more than a decade of wage stagnation, this is the last thing working families need.
âThe government cannot stay out of this crisis. We need a proper plan for wages to rise across the economy, otherwise the squeeze in household budgets will continue.
Ministers should now get to the table with unions and employers and strike fair wage deals for every industry. This is the best way to improve the standard of living and relieve the pressure on households.
UK inflation hit a 10-year high in October at 4.2% and is expected to hit 5% next year.
Wage growth has slowed recently, however, with underlying earnings growth estimated at 3.4% to 4.9% for the July-September quarter.
Also coming today
European markets are expected to open higher, as investors await monetary policy decisions from the US Federal Reserve (Wednesday) and the Bank of England and European Central Bank (Thursday).
The Bank of England needs to assess whether to raise interest rates to fight inflation or resist until it knows more about the Omicron variant.
Sanjay Raja, UK chief economist for Deutsche Bank, predicts that the BoE will increase borrowing costs – although other voices in the city do not foresee any change.
Basically, news of the Omicron variant has changed little on the medium-term economic outlook. The job market remains as tight as it has been in recent memory, despite the end of the leave plan on September 30. And inflation continues to beat staff expectations, despite a major upward revision to the November Monetary Policy Report.
Additionally, Omicron’s potential disruption could lead to even more inflationary pressures in the medium term, with supply chain bottlenecks and labor shortages / mismatches further exacerbated by growing restrictions, both nationally and globally.
It’s a finely balanced decision, however, he adds.
Later today, the Bank of England will release its assessment of the soundness of the UK financial system and the results of its annual stress tests on banks.
These should show that banks have strong capital buffers, which could pave the way for more lending to support the economy during the pandemic.
According to the Mail on Sunday, the BoE is also preparing to water down UK mortgage rules, easing affordability restrictions to make it easier for borrowers to take out larger home loans.
And millions of office workers could once again be working from home offices, attics or kitchen tables, as the government asks the British to work remotely “if you can.”
- 5 p.m. BST: Bank of England releases financial stability report
- 5 p.m. BST: Bank of England publishes results of its 2021 solvency stress tests on UK banking system