BANKING GIANT'S DIRE WARNING ON LABOUR PLEDGES

'Minimum wage hikes would at some level have a detrimental impact on unemployment'

- Martyn Brown and Michael Knowles

BANKING giant HSBC has warned that Labour's plan to boost workers' wages risks triggering a surge in unemployment and driving up mortgage bills for millions.

And worryingly, its economists raised fears Sir Keir Starmer's flagship policy could also stoke inflation.

The Labour Party was left floundering yesterday when asked by the Daily Express for a response to their concerns at a press conference.

Shadow Paymaster General Jonathan Ashworth dodged answering before the footage was taken off social media.

Lingering

Elizabeth Martins and Emma Wilks of HSBC said in a note to clients: "A higher minimum wage could increase costs and reduce efficiency, adding to unit labour costs.

"This in turn could either push firms into reducing headcount and/or sustain lingering inflation pressures, keeping bank rate higher for longer."

HSBC's analysis comes days after the Labour leader pledged to bring in a "New Deal for Working People" within his first 100 days in power if elected on July 4.

This includes replacing the minimum wage with a so-called "genuine living wage" that reflects the cost of living. But economists at the bank believe raising the minimum wage beyond adjusting it with inflation would result in another larger jump in costs for firms next year.

It comes after it soared by a record amount in April - from £10.42 to £11.44 with the average wage bill growing by 20% for employers in the past two years.

Pushing up inflation again would undo the reduction under Rishi Sunak's watch where it has come down from 11.1% in late 2022 to just 2.3% now.