The Bank of England governor Andrew Bailey has warned there is evidence that the Chancellor’s employers tax increases is hitting workers pay and affecting jobs.
The bank’s governor warned there is greater “uncertainty” over inflation and told the British Chamber of Commerce annual conference that companies are responding to April’s employer’s national insurance contributions.
Bailey said that companies could pass on the increase in paying for higher salaries onto customers, he added, “I am beginning to hear a bit more evidence of adjustments through pay and employment.”
The rise in inflation in May “introduces some further uncertainty into the near-term outlook” for businesses prices, adding that they need “squeeze out” inflation.
Bailey said, “While the significant progress we have made on disinflation has allowed us to cut Bank Rate, we retain a restrictive monetary policy stance to squeeze out remaining persistence in inflationary pressures.”
Bailey added, “Overall, interest rates remain on a gradual downward path.
“But monetary policy is not on a pre-set path, and at the June meeting, there was not a strong enough case to cut Bank Rate.
“As we meet for our August meeting in a few weeks’ time, we will assess the situation afresh.”
