UK inflation rate rises to highest level in nearly four years

The UK’s inflation rate as measured by the Consumer Prices Index (CPI) rose to 2.9% in May, up from 2.7% in April, data published by the Office for National Statistics (ONS) has revealed.


The rising costs of package holidays and imported computer games helped to push the rate to its current level. The ONS found that food and clothing prices also rose, but fuel prices fell.

Economists had previously predicted that the rate of inflation would remain at 2.7% in May.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), commented: ‘Higher inflation is a key business concern as it squeezes margins and weakens their ability to invest, particularly during this time of heightened political uncertainty.

‘A key focus of the new government must therefore be on easing the current pressure on firms’ cost base by tackling the burden of upfront costs and taxes associated with doing business in the UK.’

Meanwhile, the Trades Union Congress (TUC) expressed concerns that the UK’s rising inflation rate ‘continues to far outstrip wage growth’.

Frances O’Grady, General Secretary of the TUC, warned: ‘The election showed that working people are struggling. The new government must stop the real wage slide. Ministers must focus on delivering better-paid jobs all around the UK.’

UK workers set to experience fall in real wages, analysis suggests

UK workers are set to experience a fall in real wages in 2017 and 2018, according to an analysis published by the Trades Union Congress (TUC).

The analysis, which is based on forecasts from the Organisation for Economic Co-operation and Development (OECD), found that the UK will be one of just five OECD countries to experience a fall in real wages.


UK real wages are on course to fall by -0.5% by the end of 2018. The business group found that, in other OECD countries, real wage growth is set to increase by an average of +2.6%.

Real wages for UK workers will be -6.8% lower in 2018 than they were in 2007 before the financial crash, the OECD has predicted.

The TUC is urging the next government to act in order to boost UK real wage growth.

Frances O’Grady, General Secretary of the TUC, commented: ‘British workers have endured the longest pay squeeze since Victorian times.

‘Britain badly needs a pay rise – and all the political parties must explain in their manifestos how they will boost living standards across the UK.’

UK workers’ wages ‘fell by 1% per year’ following financial crisis, TUC suggests

Wages for workers in the UK fell drastically following the 2008 financial crisis, research from the Trades Union Congress (TUC) has suggested.


The TUC’s analysis of International Labour Organisation (ILO) figures outlined that, from 2008 to 2015, UK real wages fell by 1% a year.

As a result, the UK ranks 103rd out of 112 countries for wage growth during the post-recession period. The business group warned that this ranking is unlikely to improve any time soon.

Wages for German workers, however, rose by 0.9% per year during the period, while wages for workers in France rose by 0.6%, the analysis revealed.

The data also showed that average wage growth across all countries was 2.3%. The median was 1.6%.

Frances O’Grady, General Secretary of the TUC, commented: ‘UK workers suffered one of the worst pay squeezes in the world after the financial crash. And with food prices and household bills shooting up again, another living standards crisis is a real danger.’

Pay growth to remain slow until end of decade, suggests CIPD

Wage growth is predicted to remain slow until the end of the decade, a new survey by the Chartered Institute of Personnel and Development (CIPD) has suggested.

The data, which is based on survey responses from over 1,000 businesses, indicates that pay will rise by just 1.7% during the next year, contributing to the ‘jobs-rich, pay-poor’ UK economic environment.

This predicted low figure may possibly be due to weak productivity and the introduction of additional expenses for employers, such as the National Living Wage (NLW) and pensions auto-enrolment.


Mark Beatson, chief economist at the CIPD, stated: ‘The NLW and roll-out of pensions auto-enrolment were introduced to improve the living standards of low-paid employees, but this can only happen without significant job losses if the productivity of low-paid employees also increases’.

The wage growth predictions come as the Confederation of British Industry (CBI) cut its economic growth forecast for both this year and for 2017.

Carolyn Fairbairn, CBI director general, said: ‘A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.

‘At present, the economic signals are mixed – we are in an unusually uncertain period.’

Jobs recovery could be impeded by red tape and extra taxes, warns CBI

UK businesses looking to hire face additional taxes and red tape on jobs, making employing new staff too expensive, the Confederation of British Industry (CBI) has stated.

New labour costs, such as the National Living Wage (NLW) and the apprenticeship levy, mean that many companies are considering raising prices or placing a freeze on recruitment in order to offset the extra costs that these schemes will bring.


Carolyn Fairbairn, CBI director-general, stated that firms may have to cut down their workforces in order to save.

Speaking to The Sunday Times, Mrs Fairbairn warned that unless there are changes, it is ‘inevitable that there will be significant job losses’ in some sectors.

She added: ‘There’s a danger of Government complacency, with companies facing multiple increasing costs, through the apprenticeship levy, the National Living Wage and unreformed business rates, these are acting as a cumulative drag that could hamper growth’.

According to a recent study by the CBI, 43% of businesses expect to hire new permanent employees next year. Furthermore, a total of 51% of employers will consider raising wage levels to offset any costs introduced by the new compulsory NLW or the apprenticeship levy.

Some 47% of firms believe that the new apprenticeship levy will be ‘costly and bureaucratic’. A mere 16% of UK businesses support the levy.

However, a Government spokesperson said the measure ‘will mean that businesses and the public sector invest in the skills and training they need.’

The levy will be introduced in April 2017 at a rate of 0.5% on company wage bills, raising an estimated £3 billion a year.

Meanwhile, the NLW will come into force in April 2016, and will apply only to those workers aged 25 or over. The rate will initially be set at £7.20 an hour, rising to £9 an hour by 2020.

Advisory body predicts that National Living Wage will cost UK businesses ‘more than £1bn’

Government advisory body the Regulatory Policy Committee has estimated that the National Living Wage (NLW) will cost firms an additional £804.4 million in staff and wages costs.

The organisation stated that an extra £234.3 million in ‘wage spillover’ effects from retaining differences in pay will push the cost over the £1 billion mark.


This total rises slightly further when the public sector is included – within this category, many workers are already paid an amount above the NLW.

The Institute of Directors (IoD) has suggested that implementing the NLW is only one of a series of new costs facing UK businesses.

Head of employment and skills policy at the IoD, Seamus Nevin, stated: ‘A new payroll tax, in the form of the apprenticeship levy, will cost employers £12 billion over the course of the Parliament, while the next tranche of pensions auto-enrolment will affect the very smallest businesses’.

Currently, nine out of ten members of the IoD pay a separate, voluntary Living Wage to their staff members. The voluntary Living Wage is used as an informal benchmark, and recommends that businesses pay their employees a figure of £8.25 an hour, while the suggested rate for those based in London is set at £9.40 an hour.

The new compulsory NLW will come into force in April 2016 and will apply to those workers aged 25 and over. Initially, the rate will start at £7.20 an hour, rising to £9 by 2020.

Low pay rise levels persist in spite of economic recovery

Despite Britain’s economy recovering, pay rises are to remain at a low level, with wages expected to increase by around 2% over the next year, according to a new survey released by the Chartered Institute of Personnel and Development.

The prospect of subdued pay rise levels comes in spite of the introduction of a new national living wage of £7.20 an hour from next April.

The survey also highlighted complaints from business leaders regarding job applicants’ lack of skills.

It revealed that the number of applicants for jobs requiring low skills averaged at 25, whilst medium-skilled jobs received 15 applications and higher-skilled roles secured only eight applications.

pay gap

However, the survey suggested that only a small number of industries have been affected by skills shortages, with these industries utilising more training resources or employing apprentices.

Furthermore, a separate study has suggested that Britain’s gender pay gap will mean women are effectively ‘working for free’ until the end of this year, beginning from 9 November.

According to the Fawcett Society, Equal Pay Day falls on this date for 2015.

The gender pay gap between men and women working full-time currently stands at 14.2%, data from the Office for National Statistics (ONS) reveals. These figures are measured by gross hourly pay and reflect the latest obtainable data, which, presently, is taken from 2014.

The gender pay gap statistic for all workers, whether they are in part-time or full-time employment, is 19.1%.

Chief executive of the Fawcett Society, Sam Smethers, stated: ‘There has never been a better opportunity to close the pay gap for good’.