12 Sep 2023

Stalling economy and soaring pay poses problem for chancellor

Economics Correspondent

Will soaring wages and a stalling economy pose a problem for the UK?

Wages are going up at the fastest rate on record, finally outstripping inflation. But at the same time, unemployment is moving up and employment is falling as higher interest rates squeeze activity.

The boom in wages will create a dilemma for the government: pensions are due to go up in line with them – almost certainly outstripping the increase in benefits for working age people – and boosting the argument over which generation benefits the most from public spending.