The Bank of England is to hand staff a four percent pay rise despite Andrew Bailey telling Britons not to ask for wage increases to curb inflation.
Staff at the BoE will be handed the four percent pay rise along with a one percent salary top up for 2024-25 as the central bank seeks to retain them in a competitive jobs market.
First reported by Bloomberg, the Bank’s pay offer is said to be a bigger increase on last year’s 3.5 percent rise and one percent top up.
Mr Bailey told British workers in June they would have to refrain from making wage demands if they wanted to bring inflation down. Former Prime Minister Boris Johnson rebuked the BoE governor in February 2022 for saying the same thing.
The Governor of the Bank of England, who earned £597,952 in 2022-23, is reported to have turned down pay rises himself.
In June, Mr Bailey said the Bank would bring inflation down to its two percent target, but doing so meant in part ending wage increases.
The Bank said its current deal reflected the need to consider the challenges of retaining critical skills and cost-of-living pressures among staff.
A spokesperson for the BoE is reported by Bloomberg as saying: “The Bank needs to strike a balance between our own budget constraints, the best use of public funds, the challenges of retaining critical skills, and addressing the cost of living pressures facing our staff.
“As part of the negotiations with the Union, the Bank agreed a pay award for 2024/25 of four percent. The Bank also maintained a one percent increase in non-pensionable benefits which was implemented last year.”
The UK’s rate of inflation was most recently recorded at four percent in January, the same as the previous month.
Bank rate is currently at 5.25 percent after 14 increases were made in an effort to thwart rampant inflation.
Economists and banks have widely predicted the Bank’s rate-setting Monetary Policy Committee (MPC) could opt for its first cut since the start of the COVID-19 pandemic in the first half of this year.
However, some MPC members recently signalled caution about a possible interest rate cut.
Huw Pill, Chief Economist at the Bank, said last week he believed a cut to UK interest rates was still “some way off”.
In a speech at Cardiff University, he said: “In my baseline scenario the time for cutting Bank Rate remains some way off.
“I need to see more compelling evidence that the underlying persistent component of UK CPI (Consumer Prices Index) inflation is being squeezed down to rates consistent with a lasting and sustainable achievement of the two percent inflation target before voting to lower Bank Rate.”
