Wage squeeze worsens in Britain as inflation hits 4-year high

Figures from the Office for National Statistics (ONS) have shown that unemployment in the United Kingdom has fallen to its lowest rate in 42 years whilst the number of people in work has hit an all-time high.

It said the jobless rate dropped to 4.6 percent in line with the calculation criteria set by the International Labor Organization (ILO), marking the lowest level in nearly 42 years.

"Without higher wage growth, real earnings will continue to fall for the next two years, weighing on consumer spending and thus GDP growth", said Christian Schulz at Citi.

In the three months to March, average wages grew at a rate of 2.4%.

Scotland recorded an unemployment rate of 4.4% in the first three months of this year - lower than the rest of the United Kingdom as whole - with the statistics showing employment in the country increased by 5,000.

Analysis showed that the Urban index rose by 17.62 per cent (year-on-year) in April from 18.27 per cent recorded in March, and the Rural index increased by 16.69 per cent in April from 16.47 per cent in March.

Rising prices for clothing, vehicle excise duty and electricity also played a part, but a fall in the price of petrol and diesel slightly offset this.

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The ONS figures from the manufacturing sector showed output fell 0.6 per cent in March, but recent industry surveys have painted a brighter picture. Non-UK nationals represent 11.1 per cent of the workforceThe number of non-UK nationals working in the UK increased by 207,000 to a record 3.5 million in the first quarter, representing 11.1 per cent of the workforce.

But pay excluding bonuses rose by 2.1 percent year-on-year, the weakest increase since July and below expectations for a 2.2 percent rise in a Reuters poll of economists.

The BoE said on Wednesday there was little sign that companies planned to raise annual pay awards above the 2.0-2.5 percent level of recent quarters.

"The big question for every party is - what's your plan to get Britain's wages rising again?" When taken together with yesterday's acceleration in inflation to 2.7 per cent, real wages are now falling.

Economic growth slowed in the first quarter but the labor market performed reasonably well.

Some experts though are not so optimistic on the future wage growth.

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