British Companies Getting Ready For Massive Wages Increase, Rate Hike In Store
Recent BoE survey, which includes opinions of 368 companies with 845,000 employers, indicated that UK businesses were planning to raise wages from 2.6% to 3.1% this year, which will mark the largest salary raise in ten years. And now, Bank of England said it would be obliged to execute a rate hike sooner as it’s worried that domestic inflation pressures would increase. Analysts assume that BoE will raise rates by a quarter of a percentage point to 0.75% in 3 months from now.
Minimum wage for employees aged 25 and above will be lifted by 4.4 percent to GBP 7.83 per hour. Salary for younger employees will be raised by more than 5%. Howard Archer (economist at consultants EY Item Club) told: "Expectations that the Bank of England will raise interest rates in May will likely be fueled by their regional agents reporting a pick-up in companies' expected average pay settlements".
Companies complain that there are cost pressures from increased mandatory pension contributions, inflation pressures and also lack of immigrant workers. As we know, inflation in Britain is on its yearly maximum and there is a serious harm to the economy from the Brexit process. Still, Bank of England is convinced that inflation will stabilize.