BOE's Haldane Says U.K. Wage Growth Is Starting to Take Root

The anticipated acceleration of U.K. wage growth amid record-low unemployment may finally be arriving, according to the Bank of England’s chief economist.

Speaking before lawmakers in Parliament on Wednesday, Andrew Haldane pointed to recent survey data as evidence that pay settlements are increasing, a move that, if realized, would ease some of the squeeze faced by consumers in the wake of faster inflation since the Brexit vote. In written testimony released during the hearing, Haldane said risks for the U.K. economy were “to the upside.”

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“The long-awaited -- and we have been waiting for a long time -- pickup in wages is starting to take root,” Haldane said. “We get intelligence from our agents that would suggest that wage settlements this year were going to pick up, perhaps to a number with a three in front of it, rather than a two in front of it.”

It’s very likely there will be stronger official numbers for earnings growth from January, he added, as the start of 2017 was a difficult period for wage settlements. The BOE expects the rate to hit 3 percent in the first quarter, from 2.5 percent currently, followed by a “pretty slow” increase from there, Haldane said.

— With assistance by Lucy Meakin, Mark Deen, Piotr Skolimowski, Marcus Bensasson, Carolynn Look, Andrew Atkinson, and Stuart Biggs

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