Wage growth is almost irrelevant at the moment because it can immediately drive inflation. My Mrs was offered a 1.5% increase, obviously that's pathetic but she works for a not-for-profit charity. How would a charity offer a 5% increase without going bust and what's the point if that causes prices to rise even further?
The more critical thing on the table is not wages but to tackle the rapid increase in prices. Fuel prices are especially mental, diesel was £1.36 two months ago, it's now touching £1.50 but the shortages are over. Oil prices are high indeed but they're down on the last month so why haven't prices followed?
Tesco recently had a lot of shortages etc and we saw their empty shelves yet they have posted a £300m (30%!!) increase in profits compared to last year.
Clearly there have been problems but let's not pretend that it's not profit that is currently driving inflation. Some people are making an absolute killing out of this so it's no wonder that they're telling us about shortages so that we'll buy early at premium prices for Christmas!
Not sure telling people that their ‘wage growth‘ is irrelevant will go down well.
Wage growth and low productivity is not good. Current growth (ignoring the pandemic which artificially depressed growth) is looking grim. Trade is below pandemic norms, high fuel prices, labour shortages, glitches in supply chains and consumer spending weaker than expected. Taxes are on the up.
And after yesterday’s debacle, Johnson is rallying the troops around the Brexit flag with briefings about the possibility of a trade war with the EU over NI - something no one in NI, outside of hardline Unionists, wants. None of this will help business or consumer confidence, nor be attractive to foreign investment.
Our current dilemma is that the Govt champions free trade, yet puts up barriers to trade. It extolls the virtues of lower taxes, yet raises them. It wants higher wages, but restricts the ability of businesses to grow and imposes additional red tape in a world of higher costs and shortages (fuel, imports, raw materials, shipping) - and higher costs fuel inflation which fuels the clamour for higher wages which fuels inflation against a background of anaemic growth and productivity.
We have no coherent trade strategy or industrial policy. Instead we have a set of contradictory impulses which work against each other. What happened over Owen Paterson is Govt policy writ large. Confused and ill conceived decisions and yet more questionable judgements from the man supposedly in charge.
