Publication Date : Sunday 19 October 2014 14:53
Poor growth keeps UK interest rates at record low: Economist
The Bank of England’s chief economist says interest rates in the UK could linger at record lows for much longer than previously estimated due to poor wage growth and global economic fears.
Chief economist, Andrew Haldane, said on Friday that real wages are falling, productivity is stagnant and savings interest rates are at their lowest since the 1970, all reminders of the country’s slow recovery since the 2008 financial crisis.
He also highlighted the weakening global growth, increased risks in the geopolitical and financial sectors, and weaker inflationary pressures, saying, “Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago.”
The gloomy statement comes as a majority of British workers have seen their wages fall behind inflation in recent years.
A study for the Institute of Policy Research published on Wednesday revealed that an average British worker is £5,000 a year worse off amid the UK’s stalled pay growth.
Moreover, one in three British workers believes their employers do not pay the living wage to all staff despite profiting from the economic recovery, the Trades Unions Congress (TUC) said.
The current UK government has been implementing austerity measures since it came to power in 2010 in a bid to tackle the country’s mounting debt and sluggish growth. The cuts have severely hit the poorest households in the country, forcing many of them to choose between paying for food or energy.