According to the latest report from the Bank of England’s network of regional agents, employees are set to receive around a two to three per cent pay rise this year, which is small in comparison to previous years.
Before the UK faced a financial crisis, average annual pay growth was typically running at four per cent but this year they are potentially losing out by more than one per cent.
However, these findings should come as no surprise to the Bank of England’s Governor, Mark Carney, as he said at a Press Conference in May that “this is going to be a more challenging time for households” and “wages won’t keep up with prices for goods and services they consume”.
Employees at the Bank of England were not impressed by this and made their feelings clear during a protest strike last week, which arose following an announcement that maintenance, security and hospitality staff would be offered a one per cent pay rise.
It is thought that the fall in wages has contributed to the decrease in Gross Domestic Product (GDP) as household consumers become more cautious in relation to their expenses and think more about the consequences of pushing for bigger pay rises.
Furthermore, the Bank of England also believes that the uncertainty of Brexit in 2019 will have an impact on investment growth and expect investment figures to be around 20 per cent lower than before the referendum. If this happens, it is more than likely that this will affect productivity growth moving forward.