It’s been a persistent bug bear of the UK economy, but wage growth should finally pick up from its historically subdued levels since the financial crisis, according to Mark Carney. Striking an optimistic tone on the state of earnings for British workers over the coming years, Mr Carney said the UK should see its negative real wage growth turn positive despite higher inflation over the coming years. He was speaking as the BoE unveiled its latest quarterly outlook on the economy. A lid has been kept on wages by the UK’s unprecedentedly weak productivity since 2008, despite an impressive rate of jobs growth that has driven unemployment to decade lows. “Our central expectation is that we do expect wages to pick up and real income growth to turn positive over the course of the next few years and that is during the period of leaving the EU,” said Mr Carney. Ben Broadbent, deputy governor, acknowledged the BoE’s hopes for a recovery in pay packets had disappointed over the past few years. However, he pointed to a “tighter” labour market, characterized by falling unemployment, as exerting an upward pressure on wages. He added that recent rise in inflation should also fade over the coming years, helping ease pressure on the cost of living for UK consumers. “We’ve got 4.7 per cent unemployment, average hours are picking up, and we are seeing recruiting difficulties” said Mr Carney who noted there are now a “variety of reasons to suspect” wage momentum. “Whether we have it precisely right, time will tell” he said.
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