MNI: Pay Deals Seen Higher; Hiring Problems Worsen -BOE Agents

--UK 2018 Pay Deals Seen Rising To 2.5% To 3.5% Rise

By David Robinson

     LONDON (MNI) - Bank of England business agents reported that recruitment

difficulties for firms across the UK had intensified and pay deals were expected

to nudge higher in 2018.

     The BOE Agents Report found firms' expectations for pay settlements in 2018

were clustered in a 2.5% to 3.5% range rather than the 2% to 3% seen in 2017.

Reports of skill shortages in all sectors have been widespread and the agents

said that recruitment difficulties were above normal in a range of areas.

     When BOE Governor Mark Carney was asked at the November Inflation Report

press conference why he believed earnings growth would rise, he trailed this

agents' report.

     Carney said that back in November 2016 the agents survey had predicted wage

growth would not pick up in 2017 "and they were right ... (their) new survey is

that wage growth will pick up in 2018."

     The MPC has split over the likelihood of pay growth rising, with the two

dissenters who backed no change at the November, deputy governors Jon Cunliffe

and David Ramsden, doubtful that pay growth would accelerate.

     The BOE agents report also found investment intentions pointed to modest

growth, similar to that seen in the past 12 months, and activity growth was

broadly stable.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$,M$$BE$]