• Bank of England governor Mark Carney: real wages will fall this year
    3 replies, posted
[t]https://i.guim.co.uk/img/media/53a40fce28ae73117c3e49436fd4c2779fefe8ca/0_288_5189_3114/master/5189.jpg?w=300&q=55&auto=format&usm=12&fit=max&[/t] [url]https://www.theguardian.com/business/live/2017/may/11/bank-of-england-super-thursday-interest-rates-inflation-growth-brexit-business-live[/url] [quote] Q: Can you explain in layman’s language what you are seeing with real wages? Certainly, smiles the governor, before delivering the bad news. The actual pace of wage growth has been slow compared to past experience, says Carney. And with inflation now rising, pay packets will take a hit. He declares: This is going to be a more challenging time for households. In our language, real income growth will be negative, Carney explains. For the public, that means “wages won’t keep up with prices”. But he remains hopeful that real wage growth will return later in the BoE’s forecast horizon. [/quote] [quote] The Bank’s quarterly forecasts published alongside the interest rate decision were for economic growth to edge up to 1.9% this year from 1.8% in 2016. That 2017 forecast was little changed from a 2% prediction made in February. [b]Growth was forecast to slow next year to 1.7%[/b], little changed from February’s 1.6% prediction. The Bank now expects [b]inflation to be 2.7%[/b] this quarter, up from the 2.4% rate it was forecasting in February. It said inflation, on the consumer prices index (CPI), would continue to rise further above its 2% target in the coming months, “peaking a little below 3% in the fourth quarter.” [/quote] Tighten those belts people! I like Carney though. He seems uniquely qualified to get us through this shitty time.
[QUOTE=mdeceiver79;52218941] I like Carney though.[/QUOTE] Canada says you're welcome.
[QUOTE]In our language, real income growth will be negative, Carney explains. For the public, that means “wages won’t keep up with prices”. [/QUOTE] As someone who studies Economics, I find disturbing that the "public" doesn't know the difference between nominal and real wages. Perhaps it's because the UK or Europe hasn't had the kind of troubles we have (20-30% annual inflation with yearly negotiations between workers and businessmen unions)
This is likely due to the effects of a depreciation in the pound now influencing prices, but it should be a momentary blip, as the BoE expects.
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