Wage Rises Must Be Earned Or Risk Stoking Inflation

‘Vicious spiral will have a knock-on effect on the private workforce’

- Tim Newark Political commentator

It's looking like a generous gung-ho Budget with the living wage going up and an end to the public sector wage freeze. But this surge in personal income has to be paid for by someone and the fear must be that inflation and taxes are going to go up, eroding a lot of the gains in our pockets.

Chancellor Rishi Sunak’s lifting of the national living wage from £8.91 to £9.50 an hour is equivalent to a 6.6 per cent pay increase and will give low wage earners an extra £1,000 a year.

Younger workers aged 21 and 22 will get an even bigger lift of 9.8 per cent while teenagers get improved minimum wages too.

It all plays very well in to Prime Minister Boris Johnson’s ambition for higher wages across the UK and is intended to compensate for a worrying rise in the cost of living.

But isn’t this just going to add to the inflationary tidal wave coming our way?

“We won’t be able to absorb all these additional cost pressures that we’re facing and this will just be an additional one of them,” says Kate Nicholls, chief executive of UK Hospitality, the trade body representing pubs, restaurants and hotels.