London Daily

Focus on the big picture.
Monday, Jul 21, 2025

Cost of living: Poorest will suffer most if wages and prices rise to reflect surging inflation, Bank of England governor warns

Cost of living: Poorest will suffer most if wages and prices rise to reflect surging inflation, Bank of England governor warns

Unions resume their attack on Andrew Bailey after he tells a committee of MPs of his "biggest concern" should companies move to match rising inflation through big pay and price increases.

The governor of the Bank of England has warned that large wage and price rises that reflect surging inflation risk embedding rising costs in the economy that will result in "slow activity and increased unemployment".

Andrew Bailey told the Treasury committee of MPs that the so-called second round effects of the energy-led rise in living costs were his "biggest concern" and, if realised, would hurt the least well-off the most and lead to even higher interest rates.

However, his calls for wage restraint were met with fury by unions who accused him of representing fat cat bosses rather than ordinary workers.

The Bank used the publication of its Monetary Policy Report earlier this month to declare that the fastest slump in living standards on record was on the way.

The rate of inflation, already at its highest level for almost 30 years at 5.5%, is tipped by the Bank to hit 7.25% in April when the energy price cap is lifted, with bills expected to rise by an average of almost £700 to account for unprecedented increases in wholesale gas costs.

The Bank, which cannot control external price shocks, has raised the base rate of interest twice in a bid to counter early evidence that wage growth was picking up fast and risked fuelling the inflation problem into 2023 and beyond.

Mr Bailey, who had urged pay restraint earlier this month, clarified that he was not saying people should not get pay rises after Labour's Angela Eagle forced the governor to acknowledge that his own wage was above £570k a year.

He told the committee he wanted to avoid big wage increases that contributed to further inflationary pressures.

The governor made his remarks after chancellor Rishi Sunak told Sky News it was not his business to dictate what private companies awarded their staff.

'Please reflect on the situation'


Mr Bailey told MPs: "It's not just wage setting, it's also price setting... it's both.

"There is very clearly an upside risk there. The upside risk... comes through from the second-round effects."

He agreed those included corporate margins, basic pay, executive pay and bonus levels and added: "It's a very harsh message."

But he admitted: "I can't dictate how people go about this, of course I can't... Please reflect on the economic situation we're in with this big economic shock coming.

"The least well-off will come off worse in this process if we don't have... restraint," he explained.

Unions, which have urged employers to help workers navigate surging inflation through improved pay, dismissed his economic argument.


Unite's general secretary, Sharon Graham, said: "Andrew Bailey blew a hole in the Bank of England's pretence to be neutral when he targeted workers' pay packets instead of company bosses and inflated profits.

"Andrew Bailey has made it clear whose side he's on. Following the last financial crisis workers experienced the longest stagnation of wages since the Napoleonic wars. Now he wants this to continue against a background of soaring inflation, even while big bosses line their pockets.

"Workers didn't cause galloping inflation or the energy crisis so why should they pay for it?

"Unite will always seek pay deals that reflect the true cost of living because anything else is a wage cut."

Newsletter

Related Articles

0:00
0:00
Close
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
×