Boris Johnson tells workers to accept pay cuts or UK faces 1970s–style ‘stagflation’ & More Trending News

Workers may have to accept real-terms pay cuts if Britain is to keep away from Nineteen Seventies-style “stagflation” and hovering rates of interest, Boris Johnson has warned.

In a significant speech, the prime minister carried out a startling U-turn on a promise – made simply months in the past – to create a high-wage economic system, as a substitute highlighting the ache to come from rising inflation.

“We cannot fix the increase in the cost of living just by increasing wages to match the surge in prices,” Mr Johnson stated, in a speech billed as the newest reset of his troubled premiership.

He stated: “If wages continually chase the increase in prices, then we risk a wage-price spiral such as this country experienced in the 1970s. Stagflation – that is inflation combined with stagnant economic growth.

“When a wage-price spiral begins, there is only one cure and that is to slam the brakes on rising prices with higher interest rates.

“That has an immediate impact on mortgages and rents. It puts up the cost of borrowing for business, it is bad for investment and growth, it is bad for jobs – it is bad for everyone.”

The prime minister blamed the Ukraine conflict for having “brutally interrupted” the bounce again from Covid, additionally dashing hopes of early tax cuts or increased spending to assist struggling households.

He pointed to “the risk of borrowing too much”, telling his viewers in Blackpool: “When you face inflationary pressure, you can’t just spend your way out of it.

“On the contrary, you have to be careful not to add to inflationary pressure. We are constrained in what we can do.”

The deputy common secretary of the TUC angrily dismissed the decision for wage cuts as “nonsense”, arguing that solely pay rises may present “financial security”.

“It hasn’t taken long for the prime minister to abandon his commitment to a high-wage economy,” Paul Nowak stated.

“British workers are suffering the longest wage squeeze in more than 200 years. They urgently need more money in their pockets.”

The prime minister’s name comes simply weeks after No 10 slapped down Andrew Bailey, the governor of the Bank of England, for saying workers should accept pay curbs to assist management inflation.

Mr Johnson described the aim of the speech as highlighting that “price pressures are going to make things tough for a while, but we will get through it”.

But, past broadly criticised concepts to increase dwelling possession, it contained no different new measures past a touch that tariffs will likely be eliminated on imported meals akin to olive oil and bananas.

Mr Johnson appeared to dismiss a suggestion that he’s planning a 2p pre-election earnings tax reduce – and ducked two alternatives to get robust with corporations refusing to move on gasoline obligation cuts on the pumps.

Asked why the UK has plunged to the underside of the world’s financial development league desk, he argued the UK ‘came out” of Covid first, which meant it is “slightly out of sync” with other economies.

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